Legislators representing Douglas County were glad to hear about a new budget projection that indicates the state is in much better financial shape than was predicted a couple months ago.
They said it shows the state should not have to raise taxes.
The local legislators, all Republicans, issued statements reacting to the Minnesota Management and Budget’s state economic forecast that projects a $1.6 billion surplus for the 2022-23 budget cycle, a sharp turnaround from the $1.3 billion shortfall projected in December for the same period.
The MMB said the turnaround is due, in large part, 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.
“This is good news,” said State Rep. Paul Anderson, R-Starbuck. “It certainly will relieve some pressure as we work to balance the budget this session. We need to work on getting our state going again because people are still hurting financially after either being put out of work or seeing their paychecks shrink in recent months. Families and businesses already have sacrificed so much over the past year. Adding tax increases to their burden simply to fuel more state spending would be unnecessary and unhelpful, so I hope those talks are put to rest for this session.”
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Surprisingly, Anderson said, tax collections coming into the state were above expectations, to the tune of nearly $1.5 billion.
“Evidently, folks made use of their COVID-relief money and spent it, causing an increase in sales tax revenue. And in anticipation of further money flowing in from Washington, the outlook for additional consumer spending is bright,” Andersons said.
Less spending than originally forecast in K-12 public education also played a part in the new budget forecast, Anderson added. Approximately 16,000 fewer students in attendance, statewide, resulted in less per-pupil funding going out to school districts, he said.
“One of the reasons for the reduction in students was frustration with COVID-19 restrictions placed on our schools,” Anderson said. “As a result, enrollment in private schools increased, as did the number of students being home-schooled.”
Another factor in reduced state spending has to do with federal payments to Minnesota's Medical Assistance program, according to Anderson. Because of the pandemic, the level of federal reimbursement was increased and Anderson expects the current rate of funding will remain the same for the remainder of the year. “That factor, alone, has saved the state over $1 billion,” Anderson said.
The state's unemployment rate has also dropped from its pandemic high of 9.8 percent to 4.4 percent in December, Anderson said.
Rep. Mary Franson, R-Alexandria, said it’s encouraging to see that Minnesota’s economy is on the road to recovery after a year of shutdowns that she said has devastated families and businesses.
“Government needs to keep encouraging this growth to help businesses, jobs, and paychecks bounce back,” Franson said. ““It’s shocking that given a $1.6 billion surplus, Gov. Walz and Democrats continue to push massive tax hikes that would impact Minnesotans at every income level.”
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Franson added that the state’s economic recovery is just beginning and tax increases would only hurt the progress that’s been made.
“Imagine if we coupled cutting taxes with allowing businesses to operate at full capacity just how roaring Minnesota’s economy could truly be,” Franson said.
Sen. Bill Ingebrigtsen, R-Alexandria, said that with the newfound surplus, it’s for the state to make sure it’s protecting families, seniors, farmers and main street businesses.
“That means no new taxes,” Ingebrigtsen said. “With our economy on the mend from the pandemic and families across the state still hurting from Walz’s economic lockdowns, we must ensure we reign in spending and growth. Our focus this year must be to get Minnesota back on track.”
Sen. Torrey Westrom, R-Elbow Lake, said the budget forecast is positive news.
“But we cannot squander this opportunity to relieve some of the crushing financial burden Minnesotans have incurred over the last year due to excessive lock downs of their small businesses and livelihoods,” Westrom added. “It is not time to raise taxes or be irresponsible with our spending. We must take this chance to reduce, resize, restructure, and repurpose government, just like most families and small businesses are having to do.”
