The Free Press, Mankato, MN

State, national news

February 27, 2014

Lawmakers mull padding reserve with budget surplus

Senate Majority Leader Democrat Tom Bakk sees value in adding to rainy day fund and not spending

ST. PAUL, Minn. (AP) — A tantalizing Minnesota budget surplus has stirred talk of tax cuts or funding bumps for prized programs and infrastructure upgrades, but a less-flashy option also has gained some currency: saving some to prepare for the next economic downturn.

Finance officials projected in December that the state would have $825 million left over after it caught up on years of deferred payments to schools. Lawmakers receive an updated amount they'll have to work with Friday, when the Department of Minnesota Management and Budget issues its latest economic forecast.

The breathing room is welcome following a string of deficits that triggered budget cuts, tax increases and drawdowns on rainy day accounts. Although calls to pad the main reserve fund aren't new, they more often than not lose out to causes seen as more pressing, such as tax cuts, infrastructure repairs or school funding hikes.

Senate Majority Leader Tom Bakk, DFL-Cook, said he'll insist on building a bigger reserve as final negotiations arrive this year.

"That probably is not the best politics, particularly in an election year. The best politics is to spend the money on something popular with the public. I understand that," Bakk said recently, acknowledging that the Senate's luxury of not facing voters this fall puts him in a different mindset than House leaders or Gov. Mark Dayton.

But if the reserves don't get addressed now, Bakk added, "when are we ever going to do it?"

When fully stocked, as they are now, Minnesota's savings and checking account balances combine to reach $1 billion. The maximum reserve amount hasn't risen in more than a decade, so it has become an increasingly smaller percentage of the state's two-year budget, which is currently more than $39 billion.

It wasn't long ago that severe fiscal trouble caused the balance in the main reserve fund hit zero and forced officials to set up a cash-flow credit line in case they weren't able to pay bills.

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