ST. PAUL (AP) -- At least half of Gov. Mark Dayton's fix to Minnesota's budget deficit comes from higher income taxes on the wealthy.

Dayton on Tuesday outlined a two-year, $37 billion budget. It calls for more than $2.28 billion in new income taxes, which he says would fall on the top 5 percent of income earners.

Dayton's proposed budget would eliminate MinnesotaCare health coverage for 7,200 adults.

Dayton outlined $775 million in cuts for health and welfare programs on Tuesday as part of his plan to eliminate a $6.2 billion deficit.

MinnesotaCare is a state-subsidized health care plan for the working poor, who pay premiums on a sliding scale. It offers less generous benefits than federal health care programs.

Dayton's health and welfare cuts would also increases surcharges on health providers by $627 million, but some of the money would be recouped in federal funding.

It would also cut reimbursements for nursing facilities by 2 percent and those who provide care in homes and community-based services by 4.5 percent.

Dayton's proposed budget includes more money for education but wouldn't immediately repay nearly $1 billion in aid that was delayed as part of last year's budget fix.

The Dayton budget unveiled Tuesday says the state will begin paying that money back in the budget cycle that starts roughly three years from now.

But Dayton would raise general fund spending on education to $14.2 billion. That's about 38 percent of the state's entire spending.

Dayton's budget directs money to optional all-day kindergarten for poor students. It would also set up a rating system to help parents make informed decisions about early childhood education providers.

Minnesota faces a $6.2 billion shortfall over the next two years.

(Copyright 2011 by The Associated Press.  All Rights Reserved.)