State economy sees gains, surpluses total $3 billion under conservative budget

Minnesotans have reason to be proud. Your hard work and ingenuity helped produce the state’s fifth consecutive budget surplus in June, for a grand total of $3.3 billion since 2011. All economic indicators show that Minnesota’s economy experienced a resurgence over the last two years. The common denominator during this time was a bipartisan, fiscally responsible budget that allowed folks to keep more their money and keep the economy moving forward. But as of July 1, this common-sense budget was replaced by one that experts say will cause every single Minnesotan to part with more of their hard-earned money.

You see, June 30 marked the end of the budget passed in 2011. When my colleagues and I took leadership of the legislature that year, we faced a historic $5 billion deficit due to mounting spending and reliance on federal funny money. In short, state government was making promises it couldn’t keep with money it didn’t have.

We took serious note of this unsustainable trend and responded by restraining spending and holding the line on taxes. That is why, as the economy improved, we’ve been able to restore funds to our state coffers and pay back obligations from previous legislatures.

The entire budget turnaround from 2011 to present totals $8 billion. Thanks to a responsible budget and the hard work of folks like you, we were able to refill an empty budget reserve with $656 million, add an extra $250 million to our cash flow account, and repay over $1 billion of the K-12 school shift.

Our responsible and common-sense policies helped build a healthier economy and provided more opportunities. Tens of thousands of Minnesotans are back to work and nearly 90,000 new businesses have popped up around the state, resulting in the fifth-fastest growing economy in the country.

Meanwhile, we were able to still fully fund our priorities. For instance, we put more money into K-12 education by adding $100 per pupil—all without raising taxes.

Even with this economic expansion and billions in greater-than-expected state tax collections, my colleagues in one-party control of the legislature increased taxes and fees by $2.4 billion and amped up spending by $3 billion. Are they not aware of the tragic lessons of Detroit?

What does this mean for your family?

A recent Department of Revenue study reveals every Minnesotan of every income level will pay more under this tax-and-spend plan. In fact, the largest increase in the state and local tax burden as a percent of income occurs for those in the lowest income bracket—not the “rich” or “top 2%” we heard so much about on the campaign trail. What’s more, the study confirms the new business tax increases will largely fall on the shoulders of consumers.

The argument for this extreme degree of taxing and spending is that it is needed to balance a projected $627 million deficit next biennium. In addition, my colleagues across the aisle claim that more money is needed to fund priorities.

First, one may note the mathematical gap in the initial argument. Why raise taxes and fees by $2.4 billion in order to fix a $627 million deficit that, by the looks of things, would be eliminated by the natural progression of our economic growth?

Lawmakers simply could have reduced this minimal deficit by slowing the rate of spending increase in the budget—without having to actually cut anything. Instead, all areas of the budget saw spending increases, and many state agencies received more than their requested amounts.

Second, I agree with my more liberal friends that we need to fund priorities. As mentioned above, while facing a $5 billion deficit, my colleagues and I were able to prioritize people over programs by increasing K-12 funding $100 per student. The current legislature, by comparison, increased funding $158 per pupil and shifted $50 million of their obligations to a later date—even though they are bringing in over $2 billion in new revenue!

Looking to the out-years, the long-term “tails” on these budget bills are even more costly than the new spending increases. I fear we will be facing yet another historic deficit in just a few short years, because revenue will have to come in greater than ever before in state history to afford this new budget.

During the summer months, I welcome your continued comments and thoughts. Please contact me at any time. I can be reached at 651-296-8872 or by email rep.mike.beard@house.mn.