Minnesota's $7.7 billion surplus: What should the state do with it?

Minnesota has a $7.7 billion projected budget surplus, the largest in state history.

The Star Tribune asked the state's legislative leaders and Gov. Tim Walz what they would do with the money. Here are some of their top priorities when lawmakers kick off the next session on Jan. 31.

Health care: Lower health care costs by adding a public insurance option to the MNsure marketplace.

Families: Create a paid family and medical leave program and put funding toward tackling the cost and availability of child care.

Economic Security: More aid via checks to frontline workers, replenish the unemployment insurance trust fund and issue one-time tax rebates to Minnesotans.

Savings: Make sure the state's budget reserves are flush.

Walz said Minnesotans want lawmakers to be "fiscally responsible with the surplus," but it's large enough to tackle some top priorities. He said some of the money should be given back to Minnesotans in the form of middle-class tax cuts and aid to help them cover the costs of their heating and gas bills this winter.

Economic security: More frontline worker bonus pay, a paid family leave program and tax cuts for middle and lower-income residents.

Education: Spending on early childhood through higher education.

Public Safety: A $100 million plan for violence prevention and law enforcement "best practices."

Climate: $1 billion proposal to address climate change.

Hortman said if legislators spend about $2.7 billion replenishing the state's unemployment insurance trust fund to avoid increased taxes on employers, Democrats will push to put the same amount toward workers. She suggested boosting funds for frontline worker bonuses to $1 billion and spending nearly $1.7 billion for two years of a paid family leave program.

Tax relief: Tax cuts focused on lower and middle-income people and those on a fixed income.

Unemployment insurance trust fund: Repay the state's debt, potentially lower unemployment insurance tax rates for small businesses.

Public Safety: Support recruiting and retaining law enforcement.

Education: Proposals to improve literacy from a young age.

Miller said the surplus means one thing: "The state is collecting too much money from the taxpayers." He said Senate Republicans will propose a very large tax relief package. On public safety and education, he stressed that the GOP wants to go "back to the basics," including adding officers and improving literacy.

Tax relief: Eliminate the state's social security tax and a moratorium on energy taxes.

Unemployment insurance trust fund: Repay $1.13 billion owed to federal government.

Public safety: Boost law enforcement budgets and recruit new officers.

Education: Tax credits for educational purposes.

Daudt said the state needs to approach its surplus with caution. He cited inflation as his biggest concern when first reacting to news of the surplus in December. "It is the wrong time to take more money out of Minnesota family budgets when they're struggling and the state government is doing so well and is so flush with money," he said.

Savings: Set aside some surplus dollars in reserves.

Health care: Support for health care workers and personal care assistants.

Education: Funding for teachers, child care and workforce training.

Public Safety: More money to recruit and retain law enforcement, along with funding for mental and chemical health and youth intervention programs.

López Franzen said Minnesota needs to save some expected surplus dollars "for whatever gets thrown our way." But she also supports spending on public safety and other issues. In addition to longer-term investments, she said lawmakers could consider more immediate moves to address crime, including car theft prevention grants and bonus pay to attract officers.