Email Update: Economic forecast
State Representative Tom Hackbarth
March 1, 2013
We received more good news regarding our state’s economy this week as Minnesota Management & Budget issued a fourth consecutive positive report.
MMB’s February forecast shows we are projected to have a positive balance of $295 million for the 2012-13 biennium. Our projected shortfall for 2014-15 continues to shrink. It is down to $627 million after being $1.1 billion last November and $4.4 billion in November of 2011. The MMB report also predicts a $782 million balance in 2016-17, up from $263 million in the last forecast.
The budget Republicans passed in 2011 is a key component in generating these positive results. We erased a $5 billion shortfall, paid off the entire 2011 K-12 funding shift and more we inherited from Democrats, replenished reserve accounts and got our economy headed in the right direction. Unemployment is down, more people are at work and our bottom line is becoming more stable.
We will put $290 million of the latest surplus toward paying off delayed K-12 funding. The 2011 shift was fully repaid with previous surpluses and now we are paying down shifts enacted under previous Democrat majorities and Gov. Tim Pawlenty. About $800 million remains.
The other $5 million will be placed in state reserves, bringing that balance to $694 million.
This is a remarkable turnaround when you consider where we were less than two years ago when Republicans set our budget.
The one thing I am concerned could undo all this progress is Gov. Mark Dayton’s proposal to raise taxes by $3.7 billion in order to increase state spending by 7.6 percent. There is no need to raise taxes to balance our budget. All we need to do is set a budget that is within the rate of revenue growth we anticipate, which is 2-5 percent. But that does not seem to be enough to satisfy the governor and Democrats in the Legislature, who apparently want to continue growing government no matter the cost.
Democrats are depending on a budget crisis to make their case for tax increases, but that just is not happening.
On another note, I have authored a Racino bill to make up for a funding gap in the Vikings stadium project left by underperforming E-pulltabs. I questioned revenue estimates last year when the stadium bill was on the table and I remain convinced they will not generate the amount of revenue stadium proponents claimed. This is becoming reality and now we need a Plan B, otherwise the state General Fund (our tax money) will have to pick up the slack.
Channel 5 recently interviewed me for a segment on this issue and here is a link to their story.
I will keep you in the loop as these issues and others develop at the Capitol. Please continue sending me your emails to weigh in on these and other issues.
Sincerely,
Tom Hackbarth
State Representative, District 31B