Governor Dayton’s 2016 supplemental budget focuses on expanding opportunity, narrowing disparities

Clark Biegler
Mar 15, 2016

Governor Mark Dayton today released his supplemental budget, which focuses on making key investments to expand opportunity in Minnesota.

The supplemental budget describes the governor’s proposed changes to the two-year state budget passed last year. He proposes $581 million in net additional general fund spending and $117 million in net tax cuts in FY 2016-17, leaving $202 million of the projected surplus unspent, or on the bottom line.

Here’s our first look at his budget.

Dayton’s budget includes several proposals focused on Minnesotans struggling to afford the basics. He proposes to improve Minnesota’s Child Care Assistance Program by conforming to new federal requirements and increasing reimbursement rates for providers, an important step to improve child care options for Minnesota families. He also proposes applying for a federal waiver to expand affordable health care through MinnesotaCare to include households with incomes up to 275 percent of the federal poverty line ($55,440 for a household of three). The supplemental budget also includes a long overdue increase to the cash grant for families in the Minnesota Family Investment Program (MFIP). This monthly grant was set at $532 for a family of three in 1986 and hasn’t been increased since. The governor’s proposed $100 per month increase will make an immediate difference in the lives of Minnesota’s lowest-income workers and their children.

In education, the governor proposes expanded access to pre-kindergarten, concentrating funding in areas with higher poverty rates and a lack of high quality pre-school options. He also proposes to create grants for colleges and universities in order to narrow the racial gaps in college education attainment in Minnesota.

In total, the governor’s budget includes $100 million in initiatives to target the state’s racial disparities in economic well-being, including down-payment and closing cost assistance, and homebuyer financial education for low- and moderate-income people with a specific emphasis on households of color. The governor also recommends $33 million for other not yet specified actions to “expand economic opportunities and eliminate disparities for Minnesotans of color throughout the state.” As these initiatives are being determined, it is important for policymakers to hear from the communities who are most affected by these disparities.

Dayton also proposes transportation improvements in motor vehicle, pedestrian, and bicycle infrastructure funded by increases in the gas tax and registration fees and additional trunk highway bonds. In the 7-county Twin Cities metro area, he proposes transit improvements funded by a half-cent local sales tax.

The governor’s tax proposal focuses on supporting the work efforts of everyday Minnesotans through expansions of the state’s Working Family Credit and the Child and Dependent Care Credit. We take a closer look at the tax proposal elsewhere on our blog.

The governor leaves a significant portion of the projected surpluses for FY 2016-17 and FY 2018-19 on the bottom line. The state’s current positive budget situation is certainly good news, but as with every economic projection, it carries a certain amount of risk. Dayton’s budget provides an additional financial cushion in case Minnesota’s economy doesn’t perform as well as previously projected.

Dayton’s proposed supplemental budget works to expand economic opportunity to more Minnesotans regardless of where they live, their income, or their race or ethnicity.

-Clark Biegler