Letter: Considering surplus, tax relief is a good idea
Minnesota’s economic experts have spoken, and they are projecting agreeable fiscal news for the state. If the estimates hold, Minnesota could expect to see a surplus of $1.871 billion for the 2016-17 budget cycle.
We’re seeing a continued trend of positive economic forecasts, which is always good news. While national trends indicate overall changes in the economy in speed of growth, Minnesota’s economic outlook remains solid.
Minnesota Management & Budget Office estimates that revenues will be $42.718 billion in Fiscal Year 2016-17, a $90 million increase over end of session estimates. Current law spending is forecast to be $41.656 billion in the current biennium, or $249 million lower than previous projections.
Diving a bit deeper into the numbers, estimated spending for human services is lowered by $416 million, while spending for E-12 and other areas has increased. Higher than expected general sales and corporate franchise taxes offset a lower income tax forecast. Among other taxes, the cigarette and tobacco tax shows the largest dollar amount change, an increase of $67 million.
A significant portion of the projected surplus — about $665 million — will be sent to budget reserves and to make other state payments.
Under current law, 33 percent of any November forecast balance in the current biennium is to be allocated to the budget reserve until the recommended level of $2.032 billion for FY 2016-17 is reached. This forecast directs $594 million to the budget reserve, increasing it to $1.597 billion.
This means $1.2 billion is projected to be left for the Legislature to allocate.
We still have three and a half months before the legislature returns, and a lot can happen in that time. While it may be a bit premature to call out how the funds should be allocated, if the trend continues we should address issues that have been put on the back burner for too long, including tax relief.