It won’t solve this year’s budget deficit, but a bill sponsored by Rep. Loren Solberg (DFL-Grand Rapids) would help the state keep enough money tucked away for the future.
HF2038 would ask Minnesota Management and Budget to examine how the state calculates how much money to keep in its budget reserve and its cash flow account, which is used to cover cyclical deficiencies between state revenue collections and expenditures.
Under the bill’s provisions, MMB would regularly review the formula it uses to calculate the recommended amount of money to keep in the budget reserve. For the cash flow account, MMB would be required to conduct a study on how to improve the long-term cash flow of the state.
“This really says to the department — and they want to do this — to have a decent study of what the cash flow account really needs to be,” Solberg said.
The House Finance Committee approved the bill April 20 and referred it to the House Ways and Means Committee. Sen. Richard Cohen (DFL-St. Paul) sponsors the companion, SF1481, which was laid over April 15 by the Senate State Government Budget Division.
The bill was trimmed down from an earlier version that would have established the Office of Long Range and Strategic Planning as an independent state agency. Solberg said the provision costs too much to be feasible this year.
Rep. Steve Simon (DFL-St. Louis Park) questioned the value of using formulas to determine how much money the state needs to keep in its budget reserve, arguing it is largely a policy decision for lawmakers and the governor.
“I’m just interested, in general, in why there needs to be mathematical precision on something that’s really kind of a policy choice. Some people want a big one, some people want a small one,” Simon said.
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