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Work on new state budget soon will be front and center

Friday, March 05, 2021

 

By Rep. Matt Bliss 

The state’s updated economic forecast is in, the governor put out his initial budget proposal and it is time to get serious working on the Legislature’s top job this session: Setting a new two-year state budget. 

This will be an ongoing process the next few months as we work to find agreement on a plan before the Legislature is scheduled to adjourn in late May. The good news is there is no longer a budget shortfall to resolve as state economists now project a $1.6 billion surplus for the 2022-23 biennium. This marks a nearly $3 billion turnaround from the $1.3 billion shortfall projected in December for the same cycle. 

Minnesota Management & Budget said the reversal is due, largely, to an improved U.S. economic outlook that is bolstered by large federal actions that have emerged since November and were not incorporated in earlier projections. The projected surplus also is related to a higher revenue forecast, lower state spending, and an increased surplus for the current fiscal year.  

It is good to see our state’s economy has not only stabilized but has improved our bottom line by leaps and bounds after concerns for a multi-billion-dollar shortfall arose in recent months. Last May, there was fear the bottom would drop out of our economy but that hasn’t happened.  

Still, people have been struggling to stay afloat and others haven’t been that fortunate. The governor proposes $1.7 billion in tax increases and I hope he scraps that notion in his revised budget plan. The state would be ill-advised to raise taxes on the same people the governor’s restrictions put out of work or caused to lose income amid the pandemic, so I hope we can put tax increases to rest this session. There simply is no need. 

Instead, our focus should be on safely re-opening Minnesota to help families and businesses get back on track as our state’s economy rises. Let’s start helping Minnesotans so they can once again earn a full living and provide the state with added revenue instead of pounding on their door for more tax dollars. 

While work on finding agreement on an overall budget will continue the next few months, there is one thing we can do to provide immediate help: pass legislation to spare businesses throughout Minnesota from being charged state taxes on forgivable emergency loans recently issued by the federal government. 

The Tax Foundation reports Minnesota is the only state in the Upper Midwest that has yet to exempt forgiven Paycheck Protection Plan loans from state income taxes. These loans were offered as lifelines for businesses to keep employees on the payroll and meet other financial obligations amid COVID-19 restrictions. More than 102,000 Minnesota businesses received them.  

It would be a great injustice for our state to skim tax dollars from emergency funding sent to struggling businesses – especially as with the state sitting on a $1.6 billion surplus.  

Education funding always is a major point of discussion with the state budget and that again will be the case, especially with the added challenges districts have faced over the last year. Bemidji schools alone are looking at a $5 million shortfall, more than half of which can be attributed to students opting for alternative educational avenues amid the pandemic.  

Changes to free- and reduced-lunch policies also are impacting schools’ bottom lines and bussing shortfalls in more sparsely populated districts, such as Bemidji, need to be resolved.  

There are a lot of layers to education that need to be considered and I look forward to those discussions as part of our overall budget planning the rest of this session.

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