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Capitol View®
Tim Pugmire

Minnesota economic outlook due Thursday; data to drive budget debate

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Minnesota lawmakers will learn this week if state finances are rebounding, and whether they’ll have a budget surplus to work with next year.

The new economic forecast, due out Thursday, will help set the tone for the 2014 session. Leaders on both sides of the aisle are cautiously optimistic. But Republican Senate Minority Leader David Hann of Eden Prairie said he doubts there will be enough extra money to convince DFL leaders to repeal three new business taxes that were passed this year.

“That would require that whatever revenue surplus there would be would have to be in excess of the roughly $240 million that’s required to restore the school aid shift,” Hann said. “I just don’t believe there will be money to do that.”

DFL leaders have indicated openness to revisiting the business taxes. But they said they won’t cut current spending to pay for the proposed repeals. The session begins in late February.

Gov. Mark Dayton and DFL House and Senate leaders promised an end to persistent budget deficits when they increased taxes during the 2013 session. Since July, tax collections have been running slightly ahead of projections.

If there’s extra money to work with next year, DFL House Speaker Paul Thissen of Minneapolis said the first priority is to pay back schools.

“Any new money will go to finish the 200-some million dollars that’s remaining to pay off the school shift,” he said. “If there’s additional beyond that, then we’ll have a discussion about what’s the top priority for that, or is it just keeping it in the reserve account.”

Dayton said he’ll wait until the next forecast comes out in February before proposing any budget adjustments.