Dayton's two-year budget plan hikes spending by $1.2 billion

Updated: 4:35 p.m. | Posted: 4 p.m.

Gov. Mark Dayton on Tuesday rolled out a $45.8 billion two-year budget proposal stressing health care, education and transportation.

The general fund budget plan includes $1.2 billion in new spending and uses almost all of the projected $1.4 billion budget surplus, and a key health care proposal would spend relatively little in taxpayer money.

Republicans said the DFL governor's plan spends too much and relies too heavily on tax and fee increases.

With President Donald Trump and the Republican Congress poised to dismantle the Affordable Care Act, Dayton is looking for a new health insurance choice for Minnesotans who buy insurance on the individual market.

Dayton has proposed a public option, which would be an extension of the MinnesotaCare program that already assists low income individuals and families.

After a $12 million start up, he said premiums would cover the costs.

"This public option could offer better benefits than many policies presently on commercial markets," Dayton said, "more options for people to keep their doctors and clinics and less expensive coverage than what is available today."

Dayton said he also wants to continue the 2 percent state tax on health care providers that is currently scheduled to go away in December 2019.

Since taking office, Dayton has successfully pushed every year for an increase in education spending. This budget calls for a 2 percent increase in the per-pupil funding formula each of the next two years. The cost of the increase is $371 million.

Dayton is also proposing increased spending on early childhood education initiatives, including the pre-Kindergarten classrooms that he wants to make available in more public schools. His pre-K proposal is $75 million.

"I believe there will be school districts all over Minnesota who will be contacting their legislators and indicating their strong desire to participate in this program if we can increase the funding," he said.

Dayton said transportation is another of his budget priorities. His plan for funding a backlog of road and bridge projects includes an increase in the gas tax and an increase in registration fees. Dayton challenged lawmakers to do something this session to address the state's transportation needs.

"It really is imperative that the Legislature act. If they don't want to adopt my proposal, then they need to come up with their own," Dayton said. "But it has to be real funding."

Republicans remain opposed to a gas tax increase. They want to tackle transportation with existing revenues. House Speaker Kurt Daudt, R-Zimmerman, said he wants to provide more tax relief than what the governor is proposing.

"One of the most troubling things in this budget are the tax increases," Daudt said. "One of the most regressive taxes that you can put on Minnesotans is a gas tax." Republicans also raised concerns about proposed fee increases in the governor's plan, including those aimed at hunting and fishing. House and Senate committees will begin holding hearings on the governor's budget proposals. GOP leaders will detail their competing budget plans later in the session.

Senate Majority Leader Paul Gazelka said Republicans share some of the governor's broad budget goals in areas such as education and health care, but they differ on approaches.

He said he personally views the public option health insurance plan as a nonstarter.

Gazelka also thinks Dayton's budget calls for too much new spending.

"We had a $2 billion tax increase four years ago," Gazelka said. "We know have a surplus and yet the governor's proposal is to increase spending 10 percent, 10 percent, and that's just more than we think is appropriate."