Greetings Friends and Neighbors,
Yesterday, during a news conference with legislative leaders, Governor Walz was asked what he plans to do about inflation. His first reply was that we need to have automatic inflation adjustments to state budgets and expenditures. He obviously appeared to be totally tone deaf to the hard-working people of Minnesota. He expressed more concern about protecting government budgets and growing the cost of government at the expense of taxpayers than their plight to the everyday growing concerns of many working families having to stretch their limited budgets caused by inflation rates highest in 40 years, eroding their purchasing power for ordinary expenses such as food, gasoline, rising property taxes, home heating, electricity, rising rents, housing costs and more.
As you have likely heard, media outlets have reported that the state is projecting a surplus of $7.7 billion. It’s old information since last November. Important to note are the following facts:
First, is that projected budget surpluses are ordinarily projected surpluses at the end of the fiscal year which in this case will be June 30, 2022. However, in this instance, approximately half of that projected surplus is money already in the bank from excess revenue from the previous biennium carried forward into the current biennium.
Second, since the $7.7 billion surplus widely reported in the news are figures released from the November 10, 2021 forecast, the updated report of January 10, 2022 reports another $833 million of excess revenue over forecast. In addition, the November forecast requires a transfer to the state’s rainy-day fund (deducted before reporting the forecast) wholly restoring the Budget Reserve Account to its recommended maximum amount of $ 2.62 billion.
Third, the state maintains a “cash account” to fund short term needs of approximately $300 million. Adding these three numbers together means that the State of Minnesota is sitting on more than $11.4 billion of uncommitted taxpayer treasure. A historic surplus!!
Fourth, all legislative decisions concerning funding and/or tax relief this session will be based upon the February 10, 2022 forecast to be released next week, which will very likely again report more surplus revenue since the January report.
All of this revenue excess is above and beyond the billions of federal dollar relief funds received by Minnesota resulting from the Cares Act and American Rescue Plan Act……..and, in addition, Minnesota’s share of the $1.2 trillion federal infrastructure bill recently signed by the Biden Administration appears to be around an additional $8 billion coming Minnesota’s way.
Last Tuesday, I introduced legislation to end the state taxation of Social Security benefits of our seniors, most of them living on fixed incomes. I also introduced legislation that would lower all four tiers of the Minnesota individual income tax rates. In addition, I introduced several other bills addressing taxes, property taxes and estate taxes.
In a time of historic budget surpluses, we must correct the over collection of taxes and high rates of taxation. The establishment of the Budget Reserve Account, better known as the rainy-day fund, is exactly the only buffer that should exist between revenue and expenditures. There is a lot of room for tax relief this session.
Best,
Jerry