- Associated Press - Friday, March 17, 2017

ST. PAUL, Minn. (AP) - Minnesota Gov. Mark Dayton said he wants to double down on one of his signature projects Friday by putting $175 million of a growing state budget surplus toward expanding a new preschool program.

The addition of about $100 million to his original proposal was part of the Democratic governor’s retooled budget that capitalizes on a surplus that’s grown from $1.4 billion to $1.65 billion. But most of the extra cash wouldn’t be spent at all, as Dayton wants to set aside $200 million to cover unforeseen costs that could come down from President Donald Trump’s administration.

It signals the Legislature’s rapidly shifting attention to setting a new, two-year budget and the brewing battle between Dayton and Republican majorities in the Legislature over spending and taxes. Dayton and lawmakers have until late May to finish their budget.

Though Republicans have only begun laying out their budget plans, Senate Republicans said this week they plan to put together $900 million in tax breaks, including a cut to the state’s lowest income tax rate and eventually phasing out Minnesota’s tax on Social Security income. Dayton’s budget calls for just $300 million in tax credits and cuts, mostly geared toward helping parents cover child care costs and increasing aid to low-income residents.

Dayton said his top priority for 2017 was protecting the state’s budget against a return to recurring deficits. He warned against massive tax breaks that could eventually cost the state billions of dollars, and worried about congressional Republicans’ plotted changes to the Affordable Care Act that could cut more than $1.5 billion from Minnesota’s Medicaid health care program in the next two years alone.

“There’s no question if the kinds of drastic reductions that the Trump administration is proposing are enacted … it’s going to have a devastating effect on Minnesota’s budget,” Dayton said. “That’s all the more reason why we need to hold onto the reserve and have a savings account to protect ourselves as best as possible.”

In the first year, Dayton’s preschool program had room for about 3,300 children. Interest was much higher than budgeted, with nearly 6,700 applications denied. The proposed spending increases would bring the state closer to meeting that demand.

Still, Republicans are planning for more modest education spending increases, and the governor has clashed with the GOP in the past over preschool, with some Republican lawmakers suggesting the programs will hurt child care providers. Dayton rebuffed that idea and said his budget also lays out extra money for child care and home visits by nurses and social workers.

“The priority ought to be what’s best for the children, not what’s in the best interest of the adults who are supposedly serving the children,” he said.

There were a number of other smaller budget adjustments also revealed Friday, including an opioid dependence program, agricultural education grants and studies to determine the appetite for a commuter rail line between St. Cloud and Minneapolis.

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