Future (for now) looks bright with projected surplus on the horizon
MARSHALL – Budget deficits have become an unfortunate norm at the state Capitol, and as compromise has often been hard to come by among political leaders, solutions to those annual deficits of the past are still being questioned and criticized.
But what does the future hold?
According to Minnesota Management and Budget’s forecast released last month, the state could be looking at a – are you sitting down? – a $782 million surplus for the 2016-17 biennium.
It would be the first time the state has even sniffed a budget surplus in some time.
The February 2007 forecast showed a $2.163 billion surplus for FY 2008-09. A year later, however, that surplus turned into a $935 million deficit for FY 08-09.
But, when it comes to the economy and state finances, nothing’s a given.
“To make this a reality, we need to continue to live within our means, slow the growth in government spending and continue getting Minnesotans back to work,” said District 22A Rep. Joe Schomacker, R-Luverne. “But according to Minnesota Management and Budget, if we stayed the course on the turnaround we’ve experienced over the last two years, this surplus would naturally happen.”
MMB projects the structural shortfall for FY 2014-15 to fall to $628 million before the state gets back in the black.
Given the state’s history and the slow, barely noticeable recovery of the economy – both at the state and national level – any kind of surplus would be welcome news to Minnesota.
“We were looking at a $180 million surplus in that biennium in the forecast in November, and between November and now, it’s improved,” said District 16A Rep. Chris Swedzinski, R-Ghent. “But once you go out that far things can change. The economy changes, things happen. But it definitely looks good.”
“It shows we’re headed in the right direction,” said District 17 Sen. Lyle Koenen, DFL-Clara City. “The progress has been slow coming out of the recession, but we are headed in the right direction. Even with the more recent forecast…every time a new forecast comes out the deficits are smaller.”
But, Koenen said, this bit of good news needs to taken with a grain of salt since the forecast does not reflect inflation and population growth.
MMB says the planning estimates are not a prediction of the future, but are designed to assist in determining how well ongoing expenditures are likely to match future revenues based on trends in the state’s economy and the level of spending that is needed to maintain current programs.
“I think we need to keep an even hand and not make real fast changes,” Koenen said. “It will be interesting to see the governor’s new budget proposal after the changes in revenue came out.”
Schomacker said government spending and potential job-killing policies are “the largest roadblocks to making this surplus a reality. The new economy is still fragile and job creators can’t afford the extra taxes and regulations being proposed this session.”
Swedzinski said further government expansion that puts more of a burden on the economy is a big issue that might work to curtail growth in Minnesota and could work against a future surplus.