State Budget Forecast projects $1.871 billion budget surplus
ST. PAUL, MN – Today, Governor Mark Dayton provided the following remarks regarding Minnesota’s November State Budget Forecast.
“Five years ago, when this press event was held, we were looking at a $6.2 billion projected deficit for the next biennium, we owed the schools over $2 billion, and there was a minimal reserve and cash flow.
“Now, five years later, we have a $1.871 billion surplus, we paid the schools, and other debts, in full, we're adding $594 million to the Reserve to create a fund of almost $2 billion in the reserve and cash flow accounts, leaving a remaining budgetary balance of $1.206 billion.
“It is important to remind Minnesotans that this dramatic improvement in our state's finances was due to improvements in our state's economy, more people working, and earning better income. Not tax increases.
“Except for the wealthiest 2 percent, no one's state income tax rates have been increased during my five years in office. Let me repeat: 98 percent of Minnesotans have seen no increase in their income tax rates. And federal conformity, and other changes, have reduced state income taxes for over a million people.
“If you're paying higher state income taxes, it's because you're earning more money. And, overall, it's more people working, and making more money, that have increased state revenues.
“What to do with the surplus? My first rule is to be responsible with it. Those who forget the lessons of history are doomed to repeat its mistakes. In 1999 and in 2000, the then-legislature and then-Governor splurged on surpluses by punching permanent holes in our state's fiscal stability. What followed was a decade of budget deficits, and massive borrowing, shifts, and gimmicks to paper over them.
“I will not let that happen again. Which means that a permanent middle-income tax cut, and a permanent transfer of general fund revenues to the dedicated highway trust fund – both of which I am willing to support – must not be so large as to jeopardize our future fiscal stability. I intend that an important part of my legacy will be responsible financial management.
“It is essential we increase transportation funding in the next session. A year ago I made my proposal which would have provided the real revenues necessary to repair and improve Minnesota's highways, roads, bridges, and public transit systems over the next decade. The Legislature rejected my proposal, so now it is their responsibility to devise a solution – a real solution – that will meet the scope of those needs. General Fund revenues can be a part, but only a part, of that solution.
“As I said several months ago, I will insist that tax cuts be matched by an equitable increase in early childhood and K-12 education funding. Lt. Governor Tina Smith is heading our administration's preparation of a proposal which will be unveiled early next year.
“Our administration has made significant progress in restoring Minnesota's previously deficient funding for early childhood, elementary, and secondary education, but we remain unacceptably low, compared to other states, in our support for early childhood, and only 20th among the states in per-pupil K-12 expenditures. Given our ranking of 11th in per capita income, we can and we must continue our efforts to close the education achievement gap, and also to raise the level of educational attainment for all students.
“Another key deficiency, which jeopardizes Minnesota's economic future, is the lack of statewide broadband coverage. The legislature's failure to continue funding for a meaningful, statewide broadband access initiative must be corrected in the next legislative session with a $100 million appropriation. That's essential to give everyone in Greater Minnesota equal access to the economic future that people in the metropolitan area enjoy.
“We have over three months before the beginning of the next legislative session, and we have six months until its conclusion. There is another forecast that will come out at the end of February, and then we'll have three months to assimilate that into a responsible budget, and deal with other essential needs like Real ID and the like.
“So we will have other parts of this to disclose in the months ahead, but overall this is just very good news for Minnesota in terms of our economy. As I said before, the credit belongs to the people of Minnesota, whose educational attainment, hard work, and productivity have resulted in our economy moving forward; and the businesses who have decided to locate or expand here. They deserve the credit, and now it's our responsibility to use that money in ways that are going to better the future of our state.”
