The Free Press, Mankato, MN


April 11, 2014

Our View: Be cautious with budget surplus

Why it matters: The current enthusiasm for legislators to spend money seems prompted by a case of amnesia on past deficits

Minnesota’s $1.2 billion surplus appears to have spurred a legislative budget euphoria like that brought by a spring day after a bitterly cold winter.

But let’s not forget winter remains a harsh reality in Minnesota as does the threat of another fiscal blizzard when the economy turns south.

So as Minnesotans, we should be ready to hunker down, have some provisions. We shouldn’t spend all of our surplus. Spending even half of the surplus seems to push fiscal prudence when bad times are still visible in the rearview mirror.

On Tuesday, the Minnesota Senate passed a budget bill that spent another $209 million of the surplus on education, prisons and raises for home health care workers. The House passed some additional tax relief in its “Tax Bill 2” but also spent $10 million on “economic development resources” for Greater Minnesota and set up a $25 million broadband grant program.

All are probably worthy of funding as Gov. Mark Dayton recently noted. But the requests are piling up and our surplus is finite.

Democrats in the House and Senate rightly refunded about $550 million of the surplus by halting scheduled tax increases and providing some relief from current taxes. They’ve designated $150 million to shore up our reserve fund. That doesn’t seem like enough given a bipartisan group has said our reserve fund was $1 billion short of where it should be.

The Senate also allocated $8.8 million in education for early learning scholarships and $11 million because our jails are getting crowded. Another $2 million would help nursing homes cover increases in the minimum wage they are likely to face.

Dayton has vowed to work with his fellow party leaders in end of session negotiations on the budget. He hasn’t said whether he will use his line item veto power to reduce some of the spending driven by the euphoria. He should.

Legislators should remember most new spending has a tendency to become a permanent addition to the base of the state budget. That builds in spending that is usually more difficult to remove once it acquires a constituency. It’s easier to say no on the front end.

So let’s temper the euphoria. We’re not out of the woods yet.

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