Greetings,
It has been my honor and privilege to have represented you in St. Paul this session. As we near the upcoming elections in November, House rules prohibit any more email communications to be initiated by my office after July 20, 2018 until after the election. However, I am not prohibited to communicate with you on matters in which you, the constituent might initiate. Therefore, we call this period for the next 120 days “going dark” and I hope that you will not hesitate to contact my office concerning any legislative matter in which we might be able to assist you with.
State Finances
Since my last legislative update, the State of Minnesota’s economic condition continues to improve since sweeping federal tax reforms were enacted last December, 2017. Prior to enactment of federal tax reforms, the Minnesota budget year beginning July 1, 2017 was accumulating deficits respecting forecasted monthly revenues vs. actual revenues received. The accumulated deficit was -$67 million as of the Sept. 10, 2017. The office of Minnesota Management & Budget (MMB) issues updates on the 10th day of every month reporting revenues over forecast. April, May and June (2018) revenue reports continued a positive trend. As of June 30, revenue received in 2018 exceeded the forecast amount by an accumulated $885 million. The July 10 update marked the half-way point of this biennium. June 30, 2018 marked the end of the first fiscal year of the biennium. When the legislature returns in January, 2019, it will begin work on proposing a budget for the 2020-21 biennium beginning July 01, 2019 and ending June 30, 2021. The improvements and expansions presently occurring in our economy both nationally and in Minnesota are having a positive effect on state revenues mainly in the area of sales tax revenue, improvements in employment have created more income tax revenue and the sum increases of both have created more business tax revenues. After years of stagnation and lackluster growth, the economic improvement is a welcome development.
Executive Power -Trade Wars & Tariffs
Recently the United States, through executive order by President Trump, has imposed tariffs against certain products entering the United States. Not surprising, foreign nations have responded by announcing their intention to retaliate in kind by imposing or threatening to impose tariffs against American products and commodities entering their borders. Central to this debate is the issue of trade deficits and fairness in the interest of promoting free trade among all nations without the imposition of tariffs either way. Minnesota producers of products and commodities may both benefit or be adversely affected by any imposition of tariffs by us or other nations against our products. Minnesota farmers could be potentially hard hit by tariffs against U.S. produced commodities making foreign produced commodities less expensive to purchase by otherwise importing nations. Minnesota is a top producer of corn, soybeans, hogs, turkeys as well as many other durables. It is important to close long-term trade deficits with other nations and it would be good policy to see these trade purchases and exports balance with each other. However, it should not be a surprise that a wealthy nation such as ours has a greater capacity to purchase goods and services produced cheaply in less prosperous nations than they are able to purchase from us.
Regarding the imposition of tariffs, what should be of concern is the abrogation of power and authority on this matter which is clearly vested in Congress according to Article I, Section 8 of our U.S. Constitution. A study of this issue finds that over the past 80-plus years, Congress has continued to cede its power to the executive branch. Authority over tariffs as well as other manner of legislative functions has slowly migrated to the executive branch and away from the legislative branch. The executive branch has continued to gain power over time and threatens the balance of power and the separation of powers envisioned by our founding fathers in creating a republic. The power to levy imposts has been inevitably wrapped up with matters of foreign policy and that has increasingly been negotiated within the presidential domain.
We should all hope that these tariffs are at worst only temporary and not interrupt expansion and growth of our economy and at best, tools which might encourage other nations who presently have been imposing tariffs upon our products to reduce or end them in the interests of free trade.
Have a great remainder of the summer and be safe as you enjoy our outdoors.
Best regards,
Rep. Jerry Hertaus