On December 3, Minnesota's budget officials passed along some welcome news: our state is projected to have a $1.871 billion state budget surplus for the 2016-17 budget cycle.
According to Minnesota’s economists, the fiscal news is due to higher than expected revenue collections and lower than expected state government spending.
To be clear, the enormousness of this surplus total isn't entirely shocking. Roughly $865 million was left unspent when the 2016-17 state budget was crafted last year, meaning lawmakers would decide what to do with it when we returned for the 2016 session.
It's also worth noting that a sizable portion of this projected surplus is already dedicated, as $665 million will be sent to budget reserves and to make certain payments that are directed by state law. Many of you have told me over the years that we should be setting aside surplus funds to use the next time we face a budget deficit. With this latest allocation - $594 million – our state now has nearly $1.597 billion in our reserves to handle any future budget problem.
So in reality, the Legislature must determine how to prioritize $1.2 billion of currently undedicated revenue before the adjournment of the 2016 session.
Minnesota is already projected to spend $42 billion on state government programs over this budget cycle, so I think it's time to look at ways to provide tax relief to Minnesotans who truly need it. For example, we could stop taxing Social Security income in our state and allow more of our aging residents to keep more of their money. Another idea would be to prioritize veterans by no longer subjecting military pay and pensions to Minnesota's income tax. Minnesota is one of only six states that levels this tax on veterans, which is crazy. These men and women protected our country; they earned their benefits and Minnesota should not be penalizing them for their service.
It's my hope that during the 2016 session both sides can put aside their differences and enact a long-term transportation plan that will adequately fund our road and bridge needs without raising taxes on Minnesotans. But with the budget finalized and now another $1.2 billion waiting to be allocated, it's also my hope that lawmakers will choose fiscal responsibility and use these funds to provide hardworking Minnesotans with some long overdue tax relief.