A closer look at state surplus
by Rep. Joe McDonald
Minnesota house Dist. 29A
Congratulations to elementary schools in Annandale, Delano and Winsted for recently receiving national recognition, highlighting their significant improvements made in student achievement.
This is quite remarkable. Only seven schools in Minnesota are 2013 National Blue Ribbon winners, yet the host district for all three of these elementary schools comprise at least part of House District 29A. In all, 286 schools nationwide received this award.
The National Blue Ribbon Schools Program is sponsored by the U.S. Department of Education. It is designed to recognize public and private elementary, middle and high schools where students perform at very high levels or where significant improvements are being made in students’ academic achievement.
Congratulations again to people at all three schools. Students, parents and school staff all deserve credit for this impressive work.
As for news at the Capitol, we recently received a new economic forecast from Minnesota Management and Budget indicating Minnesota will have a $1.2 billion surplus in fiscal years 2014-15. The 2016-17 balance is projected to be a $2.6 billion surplus.
There are a couple of ways to look at the new surplus projection. On one hand, $1.2 billion in revenue above projections indicates an improving bottom line. On the other hand, you could say the $2.5 billion in increases to taxes and fees Democrats enacted last year went far beyond what was necessary to pay for their historic spending hike.
Either way, it appears our slow economic recovery is continuing. State officials indicate Minnesota’s current GDP (Gross Domestic Product) growth is fifth-best nationally. It is good to see our economy is bouncing back after the Great Recession. Decisions the former legislative majority made got us headed in the right direction and we have outpaced previous revenue projections in each MMB report since 2011.
Now, proposals are emerging in the Legislature for how we should appropriate the current surplus funds.
Many constituents I talk with still are scrimping to make ends meet. Area business owners — including me — are operating on lean budgets. A good portion of surplus revenue should be given back to those people in the form of tax cuts. New taxes on equipment repairs, warehousing and telecommunications are damaging and even a number of Democrats are now interested in repealing them.
Some of the surplus funds also should go toward padding our state reserves. We have a fiduciary obligation to maintain reserve accounts to help protect us from economic downturns. But the level of reserves has not kept pace with spending increases over the years, meaning the percentage of backup funds has dropped in comparison with the budget total — now up to $39 billion.
I urge fellow legislators to exhibit caution as we appropriate surplus revenue. Our economy still is fragile and the last thing we should do is see it as “free” money. These dollars belong to Minnesota taxpayers who are overtaxed and — unlike the state — do not have a surplus. We should start by giving back to them. The rest could go to building reserves to help ensure adequate support for constitutional services like education, care for the vulnerable, infrastructural maintenance and public safety.