Friends and neighbors,
In case you missed it, this column ran before the holidays in our local papers. I would love to hear your feedback!
Minnesota has a budget surplus. What should we do with it?
When the legislature reconvenes in February, one item on our to-do list will be figuring out what to do with a budget surplus of about $1.33 billion. That was the result of the recent November budget forecast.
Budget forecasts are released twice per year – once in November and once in February. Together, these reports guide legislators’ decisions – what do we do with a surplus; what cuts need to be made (or, for the Democrats, what taxes need to be raised) to close a budget deficit.
It sounds complicated, but it is pretty simple: if there is a budget deficit, the legislature spent too much money; if there is a budget surplus, the legislature collected too much money from taxpayers.
The report contained some other good news as well: Minnesota’s economic outlook is still good, buoyed by low interest rates and gains in wealth, employment, and compensation. The unemployment rate has ticked up slightly to 3.2%, but that is still below the national rate of 3.6%. We continue to have a high demand for workers, with job vacancies outpacing unemployment once again.
All this adds up to another pretty significant budget surplus. So, what should we do with it?
It’s your money, so my top priority would be to return it to taxpayers. There are a lot of ideas about how to do that. Here are some of them:
- Give rebates directly to taxpayers, like the so-called “Jesse Checks” that Gov. Ventura issued twenty years ago
- Income tax rate reductions, particularly for low- and middle-incomes
- License tab fee reductions
- Targeted tax credits and aids for those who need it most, like seniors, farmers, students, Main Street businesses, and working families
After past budget surplus announcements, I often heard from constituents that they wanted us to save for a rainy day. This is reasonable: you never quite know when the next recession might hit, and it is important to be prepared – just like you would with your family budget. But I’m proud to say that due to Republicans’ smart budgeting these last few years, the rainy day fund is literally maxed out.
There is also a view that the budget surplus should be put toward programs that have a public benefit. Education is a top priority for both parties, but it’s also important to remember that in the last four years Minnesota has invested more into public education than ever before. Our current education budget sits at $20 billion, and for each of the last four years we have provided 2% annual increases to the per pupil formula – a record.
How about roads and bridges or state infrastructure? These have long been Senate Republican priorities. We have made the largest investment into roads and bridges since 2008, including finally completing the Highway 14 expansion — and we did it without raising the gas tax. But there are always more repairs, rebuilds, and improvements that need to be done.
There is no shortage of possibilities and ideas, so I would love to hear from you. Please drop me a line at firstname.lastname@example.org and let me know what you think we should do with the surplus.