COLUMNIST: State economic reports are ‘positive’
BY REP. JOE MCDONALD
Minnesota House District 29A
Minnesota Management and Budget recently provided its new economic forecast. It calls for a $1.3 billion surplus in the current biennium.
This is the latest in a string of positive economic reports. We had an $876 million surplus in November of 2011 and a $323 million surplus last February. That is a grand total of $2.5 billion in surplus revenue the last year.
As dictated by law, previous surplus funds were used to replenish our state’s once-depleted budget reserves and also to pay back delayed K-12 payments. The current surplus will allow us to fully repay all the K-12 funding delayed in 2011 and also pay back more than half of the K-12 funding delayed by the previous Democratic majority.
This is evidence that our Republican Legislature accomplished great things by reducing state spending and reforming inefficient programs. We took a laser focus to certain areas that were not delivering appropriate returns and got our budget headed in the right direction.
The report does call for a $1.1 billion shortfall projected for the 2014-15 biennium. That figure is substantially less than the $11.3 billion shortfall for the combined 2012-13 and 2014-15 biennia projected in November of 2010 (See page 10: mmb.state.mn.us/doc/fu/10/complete-nov10.pdf).
Interestingly, a public employees union responded to the budget forecast by calling for a $6 billion tax increase. We still have more work to do, but the last thing we should do is heap an enormous tax increase on Minnesotans as we continue trying to dig out of a recession. People are just beginning to regain confidence and state revenue is rising.
Federal action on the so-called fiscal cliff could become a significant factor when the 2013 session starts in January. We certainly would feel the impact of across-the-board tax increases and automatic spending cuts that could go into effect if Washington fails to act. This issue was not taken into consideration when formulating our state’s forecast, but it would significantly alter budgeting decisions in our state.
I am proud the budget decisions we made the last two years are producing results beyond initial projections. We are headed in the right direction after facing a $6.1 billion shortfall in January of 2011. It is outstanding news that we are squaring up K-12 debt.
The careful spending we brought to the Capitol is paying dividends and I urge the new majority to continue on that path. I look forward to returning to the Capitol in 2013 so we can find ways to support our priorities without threatening a fragile economy through excessive spending and unaffordable tax hikes.