The spending decisions and key reforms we made at the Capitol the last two years have generated a third-consecutive call for a budget surplus in this biennium.
Minnesota Management & Budget issued an updated economic report which reveals a $1.3 billion surplus for the current biennium. This follows an $876 million surplus in November of 2011 and a $323 million surplus in February.
This combined swing of $2.5 billion to the better means we will be able to fully replenish our state budget reserves and completely repay the K-12 funding shift enacted in 2011. We even will be able to make substantial repayment on the K-12 funding shift we inherited from the previous Democrat majority.
Our state is experiencing revenue growth in income taxes, sales taxes, corporate taxes and other areas. We also are in a period of lower spending as reforms take root. The problem is autopilot spending is set to outpace revenue growth by $1.1 billion in the 2014-15 biennium. This leaves us at a projected shortfall, but we cut down that price tag from when the previous Democrat majority was in charge.
There still are areas of our government with substantial potential to save money through increased efficiency. I would prefer we focus on those areas and spare Minnesotans from tax increases the new majority is likely to consider. I anticipate federal inaction will leave us with increased taxes, smaller wages and a tightened jobs market. Adding to the state burden would be ill-advised when our economy already is in this precarious position.
The federal fiscal cliff issue also could substantially alter our state’s budget figures and make the forecast obsolete by the time the 2013 session begins in January. I will keep you up to speed as things develop. Until then, we can be pleased with our third-straight surplus and the fact we are paying off our K-12 debt.