ST. PAUL – State Representative Greg Davids (R-Preston) said he hoped reform policies enacted by the new legislative majority last session would pay quick dividends, but he never imagined these changes would lead to a $6 billion state budget turnaround in just one year.
“The latest economic forecast is nothing but positive,” Davids said. “This is the second forecast in a row where Minnesota has seen a substantial budget surplus. Considering Minnesota faced a $5.1 billion deficit last January, and now has a $1.2 billion surplus, I couldn’t be more pleased that Minnesota’s economy is back on track.”
Davids said the budget goal of the legislative majority last session was to show some spending restraint and not raise taxes. After holding state spending rates its lowest rate of increase in decades and rejecting nearly $3 billion in Governor Dayton’s proposed tax increases on all Minnesotans, Minnesota’s economy is showing tremendous progress. State economists projected an $876 million surplus in November, and have now found a $323 million surplus for February.
Forecast revenues increased by $93 million in the last three months alone, including $71 million more in income and sales taxes.
Much like November’s $876 million surplus, February’s $323 million surplus is already spent according to current law. The first $5 million will be sent to the budget reserve, raising its total to $653 million. The remaining $318 million will reduce the school aid shifts that have been enacted throughout past legislative sessions.
“We knew tax increases were a bad idea last session, and this forecast proves it,” said Davids, who chairs the powerful Minnesota House Taxes Committee. “While our economy appears to be surging ahead, I’ll continue my fight to provide tax relief for businesses and homeowners this session, in order to make our future economic outlook even better.”