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Minnesota Legislature

Legislative News and Views - Rep. Joe McDonald (R)

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Legislative report

Friday, March 01, 2019

Above, I was pleased to participate in today's drive to raise food and funding for Wright County food shelves at Cub Foods in Buffalo. Sen. Bruce Anderson and I were on a team with a Wright County Sheriff's deputy for a friendly competition against Wright County Sheriff Sean Deringer and Wright County Commissioners. The Farm Bureau put on the event and we raised approximately $13,000 for the food shelves. I have participated in this annual event several years running and always enjoy working to help support this important resource for our communities.

Greetings,

Before we get to legislative news, I want to wish continued success to area winter athletes. This, of course, includes the Delano Tigers boys hockey team, which has qualified for the state tournament! This is the second time in program history the Tigers have earned a berth at state and please join me in wishing them all the best when the tournament begins next week at the Xcel Energy Center in St. Paul. The Class A bracket begins play this Wednesday, with times and matchups to be announced this weekend, so stay tuned.

As for news from St. Paul, an updated state economic forecast was issued by Minnesota Management& Budget this week and it shows a budget surplus of around $1 billion into the next biennium. However, MMB indicates revenue collections are down since the November forecast showed a $1.5 billion surplus. Here is a quick snippet of the report:

“The projected balance for the upcoming biennium is $1.052 billion, which is $492 million less than the November forecast. Slower projected economic growth and lower observed collections compared to prior estimates result in a reduced revenue forecast throughout the budget horizon. A slightly lower expenditure forecast partially offsets the overall reduction to the projected balance. The trend of slower growth continues into the planning horizon with projected spending growth outpacing forecast revenue growth into FY 2022-23.”

My initial reaction to this that, with a $1 billion surplus, the state already is collecting too much taxpayer money and tax increases should not be part of the discussion as a new two-year state budget is established this session. On the other hand, the $492 million drop in revenue from previous projections should make it abundantly clear that we must exhibit fiscal responsibility in setting the new General Fund spending total. We must not overextend ourselves to the point we spend our state into a shortfall. In fact, we may be wise to hold our new budget total tight at the 2018-19 level.

In any case, the release of these forecast figures will allow the House and Senate to get serious about putting together their respective budget proposals so we can work on finding agreement before the Legislature is set to adjourn in late May. The governor recently put forward his budget proposal and the new information from the forecast may cause him to go back and re-tool his plan.

Actually, the governor’s plan could use a whole lot of revisions. First of all, the governor’s proposal totals $49.8 billion for 2020-21, a nearly 10-percent increase in spending from the current General Fund budget of $45.508 billion (per the forecast). The Walz plan also raises taxes by more than $3 billion over the next two years alone and $4.7 billion in 2022-23.

His proposal would raise Minnesota’s gas tax by 20 cents (a 70 percent increase), pushing our state’s gas tax to 4th highest in the nation. The governor’s plan also includes increases to tab fees, the motor vehicle sales tax, the Metro Area sales tax, business taxes, and reinstatement of the sick tax, which is set to expire at the end of the year, adding $1 billion to the cost of health care for Minnesotans over the next two years.

It is disappointing the governor is looking to abandon the breakthrough reform we achieved during the last biennium regarding transportation funding. We passed the largest ever investment in our state’s roads and bridges – without raising taxes – in part by directing sales tax revenue already being collected on purchases of motor vehicle parts and tires toward a Highway User Distribution Fund. That was part of the overall package the House led to enactment investing $6 billion more toward the state’s transportation needs over the next decade, again, without raising taxes.

High health care costs have been a huge topic of discussion in recent months, but the governor’s proposal also fails to extend reinsurance. This could cause rates to soar once again by 50 percent or more on the individual market. Instead of extending reinsurance, the governor proposes a 20-percent premium subsidy only for those who do not receive federal tax credits under the Affordable Care Act.

This is just the beginning of budget discussions, so look for more as the session unfolds. As always, your input is welcome.

Regards,

Joe

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