Good news from the State Capitol! The Office of Minnesota Management and Budget (MMB) released the November Economic Forecast recently, and it found a $1.086 billion surplus for Fiscal Year 2014-15 and a $2.2 billion surplus for Fiscal Year 2016-17.
There’s no reason to be anything but pleased by this news. The economy has been humming along since the Republican legislature put a responsible budget in place in 2011.
Unemployment numbers also continue to decline. According to state law, any surplus must be used to repay the amount owed schools. In this instance, this surplus would pay off the remaining $246 million balance, and another $15 million would be transferred to a state airports fund due to borrowing in 2008. This would leave an undedicated fiscal projection of $825 million.
It’s too early to determine whether the budget put in place by the current legislative majority made a positive or negative impact on our economic future. You’ll recall, the Democrats went in a different direction last year, raising taxes and fees on all hardworking Minnesotans by more than $2.1 billion and increasing government program spending by more than $3 billion. We should get a better idea on those results by the end of February when we receive another economic update.
It’s worth noting that the current $1 billion surplus figure is just a projection. That number could rise or fall slightly or significantly over the next three months as Minnesotans react to these policy changes. As it stands today, Minnesota only has $55 million of that $1 billion estimation in the bank. In other words, the legislature needs to use caution when it comes to this surplus projection.
After giving the green light to $3 billion in new spending last year, the majority needs to ensure that we will have enough money to cover the current growth of state government. By the same token, if we have hundreds of millions sitting around the legislature should repeal some of the Democratic tax increases that never should have been instituted in the first place. Doing so would give businesses economic certainty, meaning they can expand and hire more employees without fear that state government is going to come after them for more money. Their investment means more money being spent in the private sector, which in turn will lead to greater tax collections.
The first move we should make is the repeal of the warehousing tax, which imposes a 6.875 percent tax on general product warehousing and storage at bulk shipping terminals beginning on April 1. This is of particular concern to several Goodhue and Wabasha county companies as their business could be lost to Wisconsin, a move that would create a negative impact on our state’s economy.
Lawmakers on all sides should be able to agree that if incoming revenue continues to outpace government program growth, we should be suspending tax hikes that were unnecessarily put into law by Democratic leadership and Governor Dayton last spring. This budget surplus suggests that Minnesota does not need more revenue and does not need to spend more, and all hardworking taxpayers should view this as welcome news.