By Rep. Joe McDonald
Minnesota Management & Budget recently issued an updated state economic forecast and it calls for a $1.87 billion surplus for the fiscal years 2016-17. That is good news but it also indicates taxpayers are being overcharged.
The 2016 session will start March 8 and, while it is not a budget year in name, the forecast information will play a significant role in our work as the Legislature considers options for how that additional revenue is appropriated.
We should start by acknowledging state law dictates one-third of the $1.87 billion will be directed toward reserve accounts. That is a good thing since the future is unpredictable and strong reserves help the state mitigate any economic downturns that may come our way.
That leaves around $1.2 billion on the bottom line as of now. February's updated forecast will provide a final set of figures so formal proposals can take shape. Expect countless suggestions to be offered for ways the surplus can be appropriated and each dollar will be tugged in many directions.
It's good to see the state's economy has taken a positive turn. This uptick has been a life-saver for small business owners in the area, including myself. More Minnesotans are working and the price of gas has fallen so people have money in their pockets. People have extra income to spend and are putting it back into the economy.
That said, the state is collecting more tax money than it appears to need. People in our district want to see some of the excess given back to taxpayers and a portion put toward roads and bridges. The bottom line is this is not a free pot of money – it belongs to the taxpayers – and we need to act responsibly.
I am in the camp that says we need to be deliberate in our actions. Our state is over-collecting in taxes and we should provide relief to families and businesses who have been overcharged in the first place. After all, Minnesota is ranked as the fourth-least business-friendly state in terms of taxation.
Let's put money back in the pockets of Minnesotans. This includes senior citizens, who often are overlooked when we talk about tax relief. A House bill would stop Minnesota's practice of taxing Social Security retirement benefits and should be enacted in 2016.
Another priority is our infrastructure, namely fixing roads and bridges. It was good to hear governor the governor say this week that his proposal to raise the gas tax is dead. This should eliminate an obstacle in creating a long-term transportation plan. Just this year, the House passed a 10-year, $7 billion transportation plan that would fix 15,500 lane miles of road and 330 bridges statewide without raising taxes. The governor and fellow Democrats blocked the measure from becoming law because of their insistence on a gas tax increase.
In any case, excess tax collections should not be used on projects such as light rail or to expand government programs. This $1.87 billion surplus nearly matches the historic tax increase Democrats passed in 2013. Many of us said a tax increase was unnecessary at the time and it is proving to be the case as our economy grows.
Stay tuned as this issue develops. I welcome your input as we prepare for the 2016 session.