The good news: the latest budget forecast shows that Minnesota has a surplus of $876 million. The bad news: the latest budget forecast shows that Minnesota has a surplus of $876 million.
While forecasted revenues will go down slightly ($24 million) from what was previously projected, the big change will be in expected spending levels (down $348 million). Of course these amounts are mere rounding errors when you consider the operating budget of about $60 billion, but still, they will make life a bit easier for legislators. Taxpayers, meanwhile, should be happy that they shouldn’t (but may still) hear calls for tax increases.
Most of the expected surplus will go towards backfilling the hole left in the budget reserve, which is a good thing. There won’t, however, be enough left over to begin to address the “school shift.” This means that the Legislature will at some time need to pay back the shift, or make permanent cuts to school funding.
The surplus is the good news. But it’s also bad news. Why? Hard times tend to focus the mind on making significant changes; easy times make necessary change more unlikely. Indeed, you could argue that government never (or hardly ever) makes important reforms unless the situation is dire. In the last session, the Legislature made some changes to the Health and Human Services budget, which accounted for 80 percent of the decreased revenues. Given the tremendous run-up of spending in that budget area, it’s a good thing that the Legislature took some action. (Right action? Enough action? Those are questions for another day.)
But what will happen to further reform? Is it dead in the water? We’ll see. Legislative leaders are talking about Reform 2.0, which may do some good. Let’s hope so: After the surplus of $876 million comes a projected deficit of $1.3 billion for 2014-15. That’s a small deficit, but also a sign that the state is not necessarily on a sustainable path.
Will the Legislature use the surplus an excuse to pay out public money for a private business (the Minnesota Vikings)? That’s of course the question on everyone’s mind. And why not? Purchasing televised entertainment for Sunday afternoons is one of those very important functions of government that we can’t live without. Right? According to the Pioneer Press, Senate Majority Leader Amy Koch “said she expects the announcement of the surplus will have no impact on the ongoing stadium debate.” Ditto for Minority Leader Paul Thissen. But hold the phone, as the late Paul Harvey would say. Gov. Dayton said the surplus “creates a better opportunity to proceed,” presumably because legislators won’t be focused on addressing a budget deficit. Idle hands are the devil’s tools?
Subsidizing the capital expenses of a private business would be a mistake for several reasons. One of them is that the legislative energy required to put a financing package together would be better put to use addressing long-term reform.