By Rep. Paul Anderson
One of the state’s major financial reports was released last week, and it caused some confusion. The November report showed Minnesota was ending the current fiscal year with a surplus of over $1 billion, but added that we faced a similar-sized deficit in the upcoming biennium. How can that be, and are both numbers “right?”
Yes, both are correct, but keep in mind that the second number, the one projecting a deficit, is only a guess as to what would happen if current law remains in place and automatic spending increases are allowed to occur during the upcoming two years beginning on July 1 of 2013. Using those future projections, we will take in approximately $35.8 billion of revenue while spending $36.9 billion….hence the deficit of $1.1 billion. And since the state cannot operate in a deficit, the Legislature will need to make adjustments to either reduce projected spending or increase revenue (raise taxes), or some combination of both.
One might then ask about the surplus at the end of this current biennium, and that’s a good question. State law dictates what must be done with any surplus when we have borrowed from our schools and utilized the well-publicized “education shift.” When the state’s cash flow and reserve accounts have been fully replenished to the tune of approximately $960 million, then any remaining surplus funds must be used to repay the shift. And that’s what’s being done with this surplus. The $1.3 billion that was mentioned as a surplus in the November forecast is going to our schools as repayment for the shift. Those funds will be sent out starting with their monthly state aid checks on Dec. 15.
That’s good news and marks the second repayment of the shift. Back in March another payment was made following the news of a surplus in the February forecast. In all, we have recovered nicely from the projected $5 billion deficit that Minnesota faced just two years ago.
As year-end approaches, we hear more and more talk about the “fiscal cliff” this country faces if there is no agreement between the Congress and President Obama. In addition to having consequences for each of us individually, the cliff would also mean large cuts in state revenue coming from Washington. One example is the Dept. of Health, which would see reductions of about $35 million for health programs over the next two years. The largest single cut would occur to the WIC program, which would see its funding cut by approximately $8 million.
CHS, the nation’s largest agricultural cooperative, held its annual meeting last week in Minneapolis. Thanks in large measure to its energy section, earnings for the year topped the $1 billion mark. In addition to returning a large portion of that back to its patron-members, the co-op also announced plans to construct a nitrogen fertilizer plant near Jamestown, N.D., that would utilize natural gas from the Bakken oil reserves in the western part of the state. The proposed $1.4 billion facility located at Spiritwood would be the largest single construction project in the history of North Dakota. The project is still in the planning stage, and if it receives final approval, a completion date of 2016 is projected.
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