Email Update: Economic forecast: Surplus in 2012-13
State Representative Tom Hackbarth
Dec. 5, 2012
Minnesota Management & Budget has issued an updated state budget forecast. It shows a $1.3 billion surplus this biennium.
The $1.3 billion comes after an $876 million surplus in November of 2011 and another $323 surplus last February, for a total of $2.5 billion over the last year. This is a huge turnaround from the $6.2 billion shortfall we faced just prior to Republicans gaining control of the Legislature in January, 2011.
The new $1.3 billion will be used to completely repay the K-12 education funding which was shifted in 2011. We also are paying off a huge portion of the K-12 payments Democrats delayed and we inherited from them.
Gov. Dayton vetoed a bill we passed last year to pay down K-12 debt, but he will not be able to block repayment this time. State law stipulates how surplus funds must be used in certain situations. In this case, it must go to delayed K-12 funding.
The MMB report also shows a $1.1 billion shortfall projected for the 2014-15 biennium. That figure is substantially lower than the projected shortfall we inherited from the Democrats in 2011 http://www.mmb.state.mn.us/doc/fu/10/summary-nov10.pdf.
We proved the last two years we can balance our budget through good management instead of turning to tax increases. It will be interesting to see how the new Democrat majority will act. A public workers union responded to the economic forecast by calling for a $6 billion tax increase. We also expect the governor to resume his push for an income-tax hike and transportation folks are lobbying for a $20 billion tax increase. State revenue already is up by nearly $7 billion since 2004-05, but apparently that is not enough to satisfy some people.
The caveat to all this is our budget numbers may need significant updating by the time the 2013 legislative session begins in January. Federal action on the fiscal cliff issue could greatly impact us with automatic spending reductions and tax increases. I will keep you posted as things develop and provide a preview of the upcoming session as we get closer to it.
Sincerely,
Tom Hackbarth
State Representative, District 48A