I hope you had a wonderful 4th of July and are enjoying the summer. The 4th of July marks a special time in the Kresha house. It is the last day before school supplies begin to show up in the stores. With 4 kids left in school, this is our first sign of things to come.
This is also the time of summer town festivals. Here are a couple of the upcoming events that I hope you will attend to support our local communities:
July 21: Grey Eagle Town Festival
Aug 3: Platte River Days in Royalton
Aug 8-11: Morrison County Fair
Aug 14-18: Todd County Fair
Aug 25: Pierz Octoberfest
This week, the Minnesota Management and Budget office announced that a growing economy produced $463 million dollars in more-than-expected revenue. So what does this mean?
First of all, the $463 million, according to state statute must pay off any unresolved school shift. This money will restore some of the educational payment funds. Over the course of 2012/2013 the school shift has been paid down by higher than expected revenue.
Why the higher than expected revenue? Three factors contributed to the positive revenue return:
1. The last biennium budget kept spending under control and slowed down the growth of government spending.
2. Taxpayers who are heavily invested anticipated a higher federal and state tax rate on investments and therefore began divesting in 2012 to avoid higher tax climates.
3. The economy has slowly been improving.
Here is a short analysis by Bill Marx, the nonpartisan fiscal analyst at the House of Representatives:
"MMB [Minnesota Management & Budget] says that more than half of the $334.9 million income tax variance came from higher liability on 2012 income taxes. Some of this increase may be explained by economic growth but MMB expects that much of the increase is due to taxpayers moving more income that projected into 2012 to avoid higher federal tax rates. This could have the effect of lowering income taxes in future years."
The new DFL budget from this past session took effect 7/1/2013. The budget, as you may know, calls for 2.1 billion in new spending and taxes. In order for our MN economy to sustain the new spending increases the planned new taxes must meet the spending demand and the economy cannot hesitate. If our economy pauses, or the tobacco tax does not raise the intended revenue, or if investors pull back from the market in response to higher healthcare and increasing Federal interests rates our state budget will likely head into deficit territory.
Again, enjoy the summer—still lots of time to soak in some sun or fend off some mosquitoes.