Minnesota's budget surplus pushes upward to $1.9 billion

By Don Davis

Forum News Service

ST. PAUL -- Minnesota's real budget debate began today when state finance officials announced a $1.9 billion surplus, an increase of $832 million from a report less than three months ago.

The surplus will allow lawmakers and the governor to spend more money, use it to cut taxes or increase the state's reserves -- or a combination of them. State legislators and interest groups already have announced desires to increase spending on a variety of programs.

Revenues are expected to be $616 million higher than expected in December and spending is predicted to be $115 million less. Other changes add $107 million more to the surplus, Minnesota Management and Budget reported this morning.

Details of the budget report are due out later today.

Chairman Ken Martin of the Democratic-Farmer-Labor Party credited lawmakers and the governor of his party for the good news.

“DFL leaders have made it a priority to improve the economy, create jobs and invest in education," Martin said. "We’ve seen great progress, evident in today’s budget surplus, but we know more work needs to be done."

One of the first Republican reactions came from Rep. Pat Garofalo of Farmington, who said the surplus means both parties will look at the surplus to fund transportation.

"Jump in surplus kills attempts at raising gas sales taxes," he tweeted. "Both sides will move toward dedication general fund revenue for transportation."

Gov. Mark Dayton released his first budget proposal on Jan. 27 based on an early December budget prediction showing a $1 billion surplus. Now he will tweak that $42 billion, two-year plan about how to spend state tax revenues to reflect today's refined numbers.

Also, today's announcement gives legislative leaders information they need to write their own budget plans, which will come out in the next few weeks.

Legislators have until May 18 to write a two-year budget and send to Dayton for his signature.

Today's report was based on national economic forecasts and altered to fit anything different in the Minnesota economy.

Minnesota's economy has shown good signs in recent months, including a lower unemployment rate than the national average. It is doing better than rival Wisconsin, which faces a budget deficit this year.

When state officials announced their budget forecast in December, they said that the $1 billion surplus would be eaten up if inflation were factored in. However, Dayton said that he would expect things like higher salaries to be handled by his commissioners within existing budgets, not in higher budget requests.