On Thursday, the Minnesota Office of Management and Budget issued its revenue forecast for the next legislative biennium, showing a whopping $1 billion surplus. Fueled by the strong state economy and budget measures taken in the last biennium, this surplus will be the basis on which the next legislature will negotiate its new budget.
This is important because we now have divided government again in Minnesota after the GOP takeover of the State House in November’s election. The governor’s office and State Senate remain in DFL hands.
A Republican House and Senate and DFL governor didn’t fare so well back in 2011. A partial government shutdown took place then, but that was during a significant budget deficit.
A surplus means many of the parties’ differences can be glossed over — for now. Unfortunately, this won’t allow Republicans much momentum coming out of their impressive victory in the 2014 election. And it also will muddle the DFL message, as the positive results of their agenda will now be credited to (or at least claimed by) a divided government.
Gov. Mark Dayton staked out two of his priorities in a Dec. 4 statement:
“I’m not going get into the details of what I would be proposing in almost two months from now, on January 27. But, as I have said before, I am very interested in the childcare tax credit, which would remove the income ceilings so that 137,000 more Minnesota families would be able to take advantage of that credit, costing about $175 million for the biennium.
“I’d also like to increase the state’s support for broadband expansion so we can hook more Minnesotans into the high-speed network, which will be crucial for economic vitality all over the state for decades to come. I would like to increase the early childhood scholarships and transportation funding, increasing roads, bridges, highways, and public transit.
Many of the classic GOP vs. DFL arguments will be revisited during the upcoming session, but the fact that significant cuts won’t be necessary will allow the two parties to get some of what they want. There would be room to cut some taxes, addressing some lingering gaps in higher ed funding, and invest in infrastructure. Ideally that infrastructure includes broadband and not just roads.
This news analysis by Don Davis shows the depth of the broadband infrastructure divide around Minnesota. Some of the most broadband deficient areas are in Republican House districts, including several that just flipped DFL to GOP. Will new Republican legislators have the foresight to see how broadband could help their districts?
Going into the session, let it be known that, at minimum, there is no particular reason for the state’s government to implode due to partisanship. Let’s hope that remains true come next spring.
It is important to note that the 1 Billion dollar “surplus” is roughly 2% of the State budget over the next two years. So while a Billion dollars is a lot of dough, it’s not that much relative to the overall budget. Secondly, due to a State budget quirk, inflation is only calculated on the revenue side of the ledger but not the expense side. Over the next two years, inflation itself may eat up the majority of the Billion dollar surplus.