The Stensrud family hopes you and yours are enjoying a blessed holiday season in the warm company of loved ones. Please use extra caution out on the roads.
You may have seen Minnesota Management & Budget recently issued an updated economic forecast. It revealed two key things: The fiscal discipline we brought to St. Paul continues to produce results, yet key challenges remain.
First, the good news. The MMB report shows a $1.3 billion surplus for the current biennium. This is the third-straight forecast which calls for revenue above and beyond previous projections. We had an $876 million surplus in November of 2011, followed by a $323 million surplus in February, for a total of $2.5 billion in surplus revenue for the biennium.
That is an impressive turnaround when you consider we faced a $6.2 billion shortfall in the days leading up to the 2011 legislative session.
State law dictates how surplus funds must be appropriated when certain conditions exist. We replenished the state reserves which were depleted to make ends meet during previous shortfalls. We also have made significant progress in paying back delayed K-12 funding.
The most recent surplus allows us to completely repay the K-12 funding which was shifted as part of the budget solution in 2011. Not only that, but we have paid down half of the K-12 shift we inherited from the previous Democrat majority. The good thing is Gov. Mark Dayton cannot veto this K-12 payback as he did with legislation we passed this year.
The MMB report also calls for a $1.1 billion shortfall in the 2014-15 biennium. The reason for this shortfall is spending is projected to increase by 9 percent, exceeding the 5-percent revenue increase that is forecast. That projected shortfall could be eliminated without the new majority raising our taxes if it were to keep spending to within a 5-percent increase.
With that in mind, a public employees union is calling for a $6 billion tax increase. Dayton’s own transportation task force is pushing for a 40-cent increase in the gas tax and an increase in vehicle tab fees (it adds up to $20 billion in taxes over the next 20 years). Dayton’s education task force is seeking a $1.8 billion tax increase. We also expect the governor to continue pushing for an income-tax hike. Other proposals would broaden the sales taxes to include previously untaxed goods and services.
It has been an honor and a privilege to serve as your state Rep. the last two years. The $2.5 billion combined surplus we generated over the last year is a gift to the new Democrat majority from the Minnesota taxpayers.
I trust there will continue to be prudent, fiscally responsible decisions at the Capitol.
Merry Christmas and happy holidays,
Kirk Stensrud (State Representative from 42A)