Ideas aplenty for what to do with state surplus

By Rep. Paul Anderson

The long-awaited February budget forecast was released late last week, and it confirms what many had been thinking, namely that the state and national economies are doing well. Here in Minnesota, the projected budget surplus after the 2016-17 biennium is nearly $1.9 billion, one of the highest in history.

Two aspects were mentioned as partial reasons for this huge number: rapidly falling oil prices and the higher-value dollar when compared to world currencies.

Lower oil prices allow consumers to re-direct spending to non-gasoline purchases, while the higher dollar makes our exports more expensive and at the same time makes imported goods more affordable. The higher dollar is only a short-term benefit, as it is already affecting farm exports, making them more expensive in the world market. If the dollar remains at historic highs, it will eventually become negative for American goods. And gasoline prices, which dipped under $2 for a short time, have already begun climbing again and are currently around $2.50 per gallon.

Ideas abound as to how to spend or give back our new-found surplus. I heard many suggestions over the weekend, with the main theme seeming to be “give it back” or at least return part of the surplus to those who actually paid the taxes in the first place. As you may recall, taxes were raised by over $2 billion in the last two years, and many are feeling that we are being over-taxed. Areas that will be looked at for relief include the statewide business property tax, property tax relief, and income tax brackets. Another idea suggested was to give rebate checks for part of the surplus directly back to Minnesotans.

I also heard the suggestion that we could use the surplus to fix our roads and bridges. In my opinion, some will go for that purpose, at least in the House transportation proposal. Governor Dayton, however, is still calling for his wholesale gas tax increase, which is being questioned by some in light of the large surplus. The governor will release a supplemental budget shortly, and he’s said to want more spending for education and he even mentioned additional funding for nursing homes. That remains a top priority of mine as our long-term care industry is in desperate need of higher reimbursement rates from the state.

The long-term outlook appears positive as the February forecast shows revenue growth that exceeds spending growth. However, that situation could change as world events unfold, and the enacted budget for fiscal years 2016 and 2017 makes revisions in revenue and spending projections. How to direct these surplus dollars is a good problem to have, but we must do it in a way that not only benefits our state today, but is also good for Minnesota in the long run.

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