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Legislative News and Views - Rep. John Petersburg (R)

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Thursday, December 9, 2021

Christmas arrived early at the Minnesota State Capitol this week, as state economists unveiled a state budget surplus of $7.746 billion – the largest surplus amount in Minnesota’s history.


From my perspective, it’s good that the state’s economic condition is positive. But government is clearly taking too much money from its taxpayers, and changes to the tax system need to be made so you can keep more of what you earn.


So how do we divvy up this nearly $8 billion windfall? Traditionally when it comes to ideas on surplus allocation, Democrats will push to spend the majority of it on new state government programs, while Republicans will advocate for ways to give most of it back to Minnesotans. With a DFL-controlled House and governor, and a Republican-controlled Senate, it will be interesting to see what agreement is ultimately reached.


All of us are feeling the financial pinch these days. It costs more to fill up your tank with gasoline, buy groceries, and heat your house. Prices seem to be going up on everything and there seems to be no end in sight, making the need for hardworking Minnesotans to keep more of what they earn all the greater.


I expect there will be numerous ideas as to how to provide Minnesotans with some relief. Permanently ending state taxes on social security; providing a moratorium on energy and gas taxes to offset rising energy and gas prices; extending reinsurance to make sure health premiums remain affordable; and, of course, one-time spending on road and bridge and infrastructure projects are the immediate options that come to mind.


In addition, record-setting unemployment claims depleted Minnesota's Unemployment Insurance (UI) Trust Fund last year, resulting in a debt of more than $1 billion to the federal government, which serves as the backstops when states deplete their UI funds.


On December 15, payroll tax rates are set to rise on Minnesota’s business owners by 15% or more to replenish the fund unless action is taken by the state. 


With a nearly $8 billion surplus and more than $1 billion in COVID relief money at the state’s disposal, it shouldn’t even be a question that we would use the available funding necessary in order to repay this debt. Local business owners, many of whom are being forced to deal with hiring and supply chain problems, should not be forced into tax increases to pay for this state problem.


Session will be here before you know it, as the gavel drops on January 31, 2022. Expect plenty of discussion on how this record-breaking surplus will be allocated.