ST. PAUL -- Minnesota again has a state budget surplus, after four years of deficits, but the governor and legislative leaders disagree whether the money already is committed.
The Finance Department reported Wednesday it expects a $701 million balance when the current two-year budget ends June 30, 2007. Another $337 million is expected to be available in a tax relief account, although legislators could change current law and spend it where ever they want.
"This is the first step in Minnesota returning to positive economic health," state Finance Commissioner Peggy Ingison said.
Gov. Tim Pawlenty said he would consider a variety of uses for the funds, including increasing public safety and education spending. House Speaker Steve Sviggum said GOP House members probably will lean toward using the funds for property tax relief and more timely school funding.
Senate Majority Leader Dean Johnson generally agreed with Sviggum, but added that some senators want to find funds for transportation or energy-cost relief.
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The report shows growing tax revenues as the reason the state no longer faces a deficit.
Individual income tax revenues now are expected to rise 1.4 percent more than predicted during the summer. Sales tax should be up 1.9 percent and corporate sales tax is projected to increase 10.9 percent.
"We have completed the largest economic turnaround in state history," said Pawlenty, who inherited a nearly $4.6 billion deficit when he took office in 2003.
The one area there appeared to be general agreement among Pawlenty and legislative leaders is that some property tax relief can be expected after years of increases.
It remains far from certain how much relief will go to the various classes of properties - homes, farms, businesses and corporations.
Another decision that must be made is whether schools will get their state aid payments on time. However, some of the funds schools expect could be siphoned off for other programs.
Ingison said starting with payments the state sends on Dec. 15, school districts will get paid most of their state aid on time. In coping with deficits the past few years, legislators and Pawlenty have delayed payments.
"We borrowed a lot of money from school districts," Ingison said.
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However, Pawlenty would not commit to fully funding schools on time. And Johnson, DFL-Willmar, said some of his colleagues would like to increase funding in several areas.
Sviggum, R-Kenyon, said he wants the state to fulfill its promise to schools. He also said he wants property tax relief
Ingison warned that despite Wednesday's good news, legislators must remain careful.
"We have gotten into trouble pretty quickly in the past," she said.
