ST. PAUL – State Rep. Jerry Hertaus, R-Greenfield, issued the following statement after an economic update from Minnesota Management & Budget issued Thursday projected a $1.54 billion state budget surplus for the upcoming biennium. Regrettably, Hertaus said, MMB also projects spending to increase by nearly 10 percent by 2022-23, exceeding $50 billion. By law, $491 million of the November forecast’s surplus must automatically be transferred to Minnesota’s budget reserve. That will leave the rainy-day account at $2.075 billion, a record level.
“If Minnesota cannot curb the growth in each biennial budget, we are automatically required to keep increasing the amount of money in the budget reserve,” Hertaus said. “Therefore, increased spending takes more of taxpayers’ hard-earned dollars and parks it in a rainy-day fund, which does not address the priorities taxpayers want the Legislature to resolve. In total, the budget reserve account now at $2.075 billion, the remaining projected surplus of $1.5 billion for 2020-21, the cash account of $300 million, is approaching $4 billion of taxpayer money sitting in state treasury accounts. Additionally, the recent Supreme Court decision, South Dakota vs. Wayfair, means that now all internet taxable transactions will generate new Minnesota revenue, estimated to be $240 million without raising taxes. Minnesota has had taxation of internet sales on the books for nearly two decades, but was prohibited from collecting the tax because of previous Supreme Court decisions.
“This strong bottom line and healthy reserves for the state should bode well in preparation for establishing a new two-year state budget. Adjustments to the state tax code should be a priority because the Legislature can take your money at any time in the future. The status as a steward of taxpayer dollars brings with it great responsibility. I look forward to the challenge of working with the new majority to ensure the new state budget, shaped with the inheritance of a $1.5 billion surplus in mind, focuses on shared priorities. With a budget reserve nearly fully funded and established as a buffer in the event of a turn-down in the economy, the Legislature should have the courage to lower Minnesota’s ranking as the No.1 highest tax state in the nation – even higher than California, now ranked eighth.”
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