Local Lawmakers Welcome News on State Surplus

Local state lawmakers are generally pleased with yesterday’s announcement that the State of Minnesota has a current surplus of $876 million, but caution that it still does not completely address the overall debt, which required the state to delay payments to local school districts and to tap into the tobacco money awarded to the state a decade ago.

“Keep in mind that technically there really isn’t a surplus,” said Rep. Steve Simon, a Democrat who represents St. Louis Park and Hopkins.

He generally favors either putting the surplus in the budget reserve fund—the so-called “rainy day” account—or starting to pay school districts the money technically owed them from the last legislative session.

By current state law, the surplus can only go into the reserve fund and can't be used to pay schools back, though lawmakers could look at changing that law when the legislature convenes in January.

In the 2011 session, lawmakers and Gov. Mark Dayton faced a $5 billion deficit. The regular session ended with no agreement between the Republican-controlled legislature and the governor, a Democrat. What followed was a 20-day shutdown of most state government services. When the two sides agreed to come back and solve the matter, they ended up delaying $1.4 billion worth of payments to local school districts and also tapped into the tobacco fund for $757 million, which will need to be paid back.

“It makes no sense, really, to call it a surplus” said State Sen. Ron Latz (DFL-District 44). “As of now, we don’t know going into the next fiscal year how much of a hole we will be in. Therefore, I am in favor of putting it in the reserve fund.”

Rep. Ryan Winkler, a Democrat who represents Golden Valley and St. Louis Park, said he believes it would “be prudent to reduce our debt.”

“We also are faced with paying the schools the money owed them or paying off the money borrowed from the tobacco fund,” he noted.

When asked what will be the debate on what to do with the surplus when the legislature convenes in late January, he said he could predict precisely, adding, “the Republicans could have several ideas of their own”.

“The situation is sort of like a family which has money in a savings account but also has substantial credit card debt they have to deal with.

”I have never heard of borrowing such as occurred this past year," Winkler said. "Regardless, it’s time to put the genie back in the bottle.”