Budget improvements a sign of what works

Rep. Mark Uglem

MN HOUSE District 36A

 

With the release of the semi-annual budget forecast last week, legislators received another dose of good news on the budget. The 2012-2013 biennium shows a positive balance of $295 million dollars which will go toward the school shift. The projected deficit for 2014-2015 once stood at $4.4 billion dollars but is now just $627 million. Even more encouraging, it seems we are on the path to fiscal stability with a projected $782 million dollar surplus for 2016-2017. Minnesota has been able to generate billions of dollars in additional tax revenue without having to raise taxes.

More importantly, as the economy has improved more Minnesotans are going back to work. There were over 50,000 new jobs created last year alone, and the unemployment rate has dropped significantly to 5.5%. New jobs means new taxpayers paying income, sales, gas, and other taxes. The greatest source of the new revenue generated over the last two years has been from income tax collections.

These improvements should be a sign to the Governor and legislators of what works and how to continue to build on these successes to ensure future prosperity. Over the last two years, state spending growth was held to a responsible 1% increase, and the Republican majorities passed several pieces of legislation signed by Governor Dayton aimed at improving Minnesota’s job climate & promoting job creation.

Instead of working to improve Minnesota’s regional competitiveness with states like Iowa, Wisconsin, and North Dakota, the Governor’s current proposal would increase taxes on a number of goods and services not taxed anywhere else in the region, and in some instances, the entire country.

The Governor’s proposal calls for a tax on business-to-business services such as advertising services, accounting services, legal services, and many others that are not taxed in any of the surrounding states. Worse, many companies rely on clients who are located in other states that choose Minnesota companies specifically because they are exempt from a tax on business services. Minnesota companies that provide services to out-of-state clients could see their business dry up and have to cut jobs as a result.

These proposals represent a step backwards for Minnesota’s job climate, and a departure from the policies that brought Minnesota’s economy roaring back. Past performance is generally best predictor of future behavior, and in this case, we have a tried and true path to economic improvement that has worked wonders over the past two years, and can continue to create prosperity for all Minnesotans. It will be up to the Governor and the new DFL majorities to determine if they wish to follow that path.

 

(Editor’s Note: Rep. Mark Uglem represents citizens in Minnesota House District 36A which covers Champlin and parts of Coon Rapids.)

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