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Legislative News and Views - Rep. Jerry Hertaus (R)

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Update from Rep. Jerry Hertaus

Friday, March 06, 2015

Dear Friends,

Greetings from the Capitol, where we recently received a new state economic forecast.

STATE ECONOMIC FORECAST

Minnesota Management & Budget issued the February economic forecast on Friday and it indicates our state's fiscal condition is improving. The forecast calls for a $1.9 billion surplus through the 2016-17 biennium, one of the highest in history and roughly double the surplus projected in the last forecast issued in November.

Two particular components were noted as reasons for revenue improvements: rapidly falling oil prices and the higher-value dollar when compared to world currencies.

Economists indicate the lower oil prices of late have allowed consumers to spend additional dollars elsewhere, while the higher U.S. dollar makes our exports more expensive and simultaneously makes imported goods more affordable. These two structural changes in our economy set the stage for strengthening our economy, by increase demand for consumer goods, by providing more discretionary spending which will put more people back to work. As the old saying goes, "a rising tide lifts all ships."

This economic forecast provides the House with figures necessary to putting a formal budget proposal in place over the next handful of weeks. Preliminary work has been taking place to establish a general outline, but this updated information will serve as our official set of numbers.

People have plenty of opinions for how the surplus revenue should be used. Some want to send money back to taxpayers. Others want to provide an infusion of transportation dollars. Still others would like to provide a bump to education. These proposals and others will be on the table as budget discussions continue. While the governor's preliminary budget proposal advocates for billions more of spending and proposes more than $900 million more dollars of new taxes, the 15.2 % rate of growth in all-funds spending is simply stated, unsustainable. Home ownership is at a 20 year low. Contrary to reports of a low unemployment rate, the labor participation rate is also at an all-time low. There will likely be several proposals to help rebuild the private sector, while making sure that the core functions of government are adequately funded.

PROPERTY TAX LISTENING SESSION RECAP

Thank you to all the people who attended the recent listening session I co-hosted with Property Tax and Local Government Finance Division Chair Rep. Steve Drazkowski at Wayzata City Hall. We received informative feedback from local citizens, especially regarding how our state's oppressive tax structure is causing senior citizens to relocate. Property tax values have improved by 6 percent in our area over the last year.

Property values have risen approximately 6% in our region while taxes from all local government units have risen approximately 2.8 percent over the same period. Despite the previous majority's claim last session that "investments" (aka, spending) such as local government aid and other targeted relief would lower property taxes, statewide average property values have increased 7.9 percent for all classes combined since last year and statewide property taxes have increased an average of 2.9 percent.

Proposals to make improvements to correct these situations are being crafted in the House and I will provide more details as things take shape.

REGENT CANDIDATE ELECTION

On Wednesday, the joint session of the Senate and House convened to elect five (5) new regents to the University of Minnesota Regent Board. The five new candidates elected were Patricia Simmons, Darrin Rosha, Richard Beeson, Michael Hsu, and Thomas Anderson. Darrin Rosha will represent our 3rd Congressional District as regent to the University of Minnesota.

Please enjoy the welcome warming weather this coming weekend.

Sincerely,

Jerry Hertaus

State Representative, District 33A

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