By Rep. Paul Anderson
The much-anticipated February budget forecast was released last Friday, and state officials were clearly impressed with the strength of Minnesota’s economy. All three major areas of tax revenue – personal and corporate income, along with the sales tax, came in above forecast. Our unemployment rate of 6.4 percent is also markedly below the national average. The surplus in state coffers surged over $400 million in the past few months to stand at roughly $1.2 billion.
As could be expected with such a surplus, a variety of methods to spend our new-found wealth have surfaced. Many of the ideas are good, but we shouldn’t go on a wild spending spree just because our economy is on the upswing. First and foremost, should be the retroactive repeal of the sales tax on commercial repairs, including those of farm equipment. Put into effect last July, the tax on the labor portion of equipment repairs has been costly for those who have had to make use of those services. The tax falls more heavily on newer businesses or younger farmers who may not be able to afford shiny new equipment that breaks down less often and is under warranty.
Repealing the three “business-to-business” taxes, along with moving our state to conformity with federal income tax laws, would cost around $600 million in lost revenue. That lost revenue must be booked as expenditure, so it appears to be new spending. It’s really just returning money back to Minnesota taxpayers that had been collected though those aforementioned taxes, which shouldn’t have been put in place anyway.
I also think we should raise the amount we have set aside in reserve. Currently, the state’s cash flow reserve and rainy day funds account for about $1 billion, an amount that hasn’t been raised in at least the past ten years. And with our state budget increasing during that same time, the percentage of reserve funds has actually decreased somewhat. Some economists call for a doubling of the size of our reserve funding. I don’t think we should go that far, but a more moderate increase is warranted.
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I think all Minnesotans would agree that winter can release its grip anytime. Starting with cold weather in December that led, in part, to the propane shortage, extremely cold and windy conditions have persisted throughout the winter. Both January and February were colder than normal, and the count of below-zero days is still increasing. It sounds as if we’ll get some relief from the brutally cold conditions of this past weekend, and it will arrive none too soon.
The Twin Cities area has more snow than we do. The last storm a couple of weeks back really hit the metro area and points to the east and south with, first rain, and then heavy snow followed by plummeting temps. It took days to remove most of the compacted ice from road surfaces. Around these parts, the consistently high winds have been more of a problem. Many stretches of our roads are lined with high ridges of drifted snow, and when those winds are blowing, drifting snow and low visibilities are problems in those areas.
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