With the holiday season upon us, state economists recently delivered news that gave all state lawmakers good cheer: Minnesota is expected to see a projected $1.871 billion surplus for the 2016-17 budget cycle.
The easy answer as to why we have this surplus is due to less than expected state spending and greater than expected overall tax collections.
To be clear, thinking lawmakers have to account for $1.871 billion next year is a bit of an exaggeration. By law, roughly one-third of that projection - $594 million – will be sent to Minnesota's budget reserves. This means Minnesota's overall reserve level increases to nearly $1.597 billion. Subtract some state payments that are also required by law, and the projected surplus allocation is actually closer to $1.2 billion.
So what do we do with this surplus? There really are only two answers: spend it or find ways to provide tax relief to hardworking Minnesotans.
With state budget spending already slated at $42 billion for the two year budget cycle, it's my opinion that the Legislature should not go on a wild spending spree. Any surplus results from an over-collection of revenue from our state's taxpayers, and this one is no exception. With a projected $1.2 billion waiting to be allocated, it's critical that we find ways to provide tax relief to the people who gave state government this surplus.
Lawmakers will return to the State Capitol for session in March. When we do, there are two topics that must be addressed. The first is long-term funding for our roads and bridges. You'll recall the Minnesota House approved legislation in 2015 that would provide nearly $7 billion to statewide road and bridge needs without raising anyone's taxes. It's my hope that we'll revisit this plan next session and pass it into law.
The second is tax relief for hardworking Minnesotans. Just because we have a surplus does not mean lawmakers should spend it recklessly. If anything, it proves the time is right to put more money in the pockets of Minnesotans.