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State Representative Joyce Peppin
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-7806
For more information contact: Austin Bleess 651-296-5529
NEWS COLUMN
BUDGET SURPLUS: GOOD NEWS FOR TAXPAYERS
By Joyce Peppin
State Representative, District 32A
Minnesota taxpayers got an early and well deserved Christmas present last week. Department of Finance officials announced that the state has a projected $2.2 billion budget surplus. The news that Minnesota will have a large surplus is further proof that our state's economy continues to improve. This is certainly a welcome change from the record deficit of $4.5 billion which faced lawmakers in years past.
The first $1 billion is one-time money for the fiscal year ending June 2007. These are funds that should not be used to make ongoing spending decisions or fund new programs. The second $1 billion is projected extra revenue for the 2008-09 fiscal years. That’s the two-year budget that the Governor and legislators will be working on in the coming months.
All told, revenues for the 2008-2009 budget will be at least $32.5 billion. That’s a lot of money, and certainly well within what the legislature needs to fund needed state programs. What is abundantly clear is that requests by some DFL lawmakers to raise taxes should be dismissed. The state is taking in much more than it needs right now, tax increases are simply not necessary or prudent.
As might be expected, many special interest groups and program administrators have already declared their intention to seek a "fair" share of the budget surplus for increased spending. However, it is important to look to see what existing law requires when a surplus is generated.
According to state law, if the November (or February) budget surplus exceeds ½ of 1% of biennial revenues it is automatically designated as a rebate. For the 2006-2007 budget cycle, ½ of 1% of our 2006-2007 revenues is $160 million. Technically, all revenues in excess of $160 million are to be automatically designated as a rebate.
The law further stipulates that once the dollar amount is known, the Governor must present a plan for the rebate. The Legislature then has until April 15 to accept, modify or reject the plan. It is likely there will be modifications to the plan. The Governor could also wait until the February budget forecast is submitted before presenting a plan to the legislature.
Last session, I voted to provide a refund to homeowners who have been hit by high property taxes. But the legislation was not enacted by the full legislature. This coming session, with the triggering of the tax rebate law, one option is to return the surplus to taxpayers through property tax rebates and, if possible, permanent property tax relief.
One option is to repeat the property tax credit plan that was enacted in 1997 during the Arne Carlson administration. Then, homeowners and renters could claim a property tax credit on their 1997 income tax forms that was up to 20 percent of their property tax bill. The credit was not subject to the income limits that are in the existing “circuit breaker” property tax refund program.
It’s important that property tax relief be targeted directly to those who pay the tax: homeowners and renters, and not distributed through convoluted local government aid formulas that don’t help our northwest suburban communities. Now, with a larger than expected surplus, there’s no reason we cannot provide such relief and still adequately fund other priorities such as education. The bottom line is that the surplus should be returned to those who made it happen, the working families of Minnesota.
Rep. Peppin represents District 32A, which includes the communities of Corcoran, Dayton, Greenfield, Hanover, Rogers, Hassan Township, and southwestern Maple Grove. Peppin invites anyone to share their questions or comments about state government with her. She may be reached by email at rep.joyce.peppin@house.mn; by phone at (651) 296-7806; or by U.S. Mail at 411 State Office Building, St. Paul, MN 55155.
News Items
- PEPPIN REPORT: NW SUBURBAN FAMILIES WILL BE HIT HARD UNDER DAYTON AND DFL BUDGET - (Posted: May 28 2013 4:35PM)
- Rep. Peppin’s bill would lessen unfair fiscal disparities tax burden on Rogers - (Posted: Apr 3 2013 9:36AM)
- PEPPIN REPORT: FEBRUARY FORECAST REVEALS FOURTH CONSECUTIVE STATE SURPLUS - (Posted: Feb 28 2013 12:00AM)
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