$300M boost from tax collections a blessing for schools

MARSHALL – In light of this week’s news that the state of Minnesota will receive a $300 million bump from better-than-projected tax collections, District 16 Sen. Gary Dahms said Tuesday the state must ride this wave of good fortune and take care of its schools.

Because of funding shifts used to fix past budget deficits, the state still owes $850 million to K-12 school districts. The lack of aid that built up during the recession forced schools to cut back or ask the public for money through levy hikes just to meet the status quo.

“This biennium is not over until the end of June, but another $300 million will make a big difference,” said Dahms, R-Redwood Falls. “That money should go to pay back the school shifts.”

“This is because of an improved economy and because we’ve kept government spending under control; we didn’t have to raise taxes to do that,” said District 16A Rep. Chris Swedzinski, R-Ghent, referring to the impending $2.1 billion in tax increases approved by the Legislature this year. “The school shift can be paid back and reserves can be put away.”

State law dictates that any revenue that comes in over projections has to go toward building up the state’s reserves and repaying school debt.

Marshall Schools Superintendent Klint Willert said dealing with the fallout of past shifts has been challenging, not just for the Marshall School District, but for every district in the state. He said the Marshall School District acted proactively by changing the way it spent federal stimulus dollars and was able to keep some monies in reserve to weather the storm created by potential losses in revenue.

Part of that included hiring practices within the district. Willert said the district knew that, over time, budget reductions would become a reality and made shifts accordingly in terms of staffing.

“It has been a real challenge,” he said. “We took some calculated risks and made some decisions as we navigated through this process; we tried to anticipate what was going to happen because we had thought we were going to hit this really hard economic time. We tried to plan for it the best we could.”

According to Minnesota Management and Budget, many key economic indicators are positive, and the state is on solid financial ground since February and March tax collections outperformed projections. Dahms said Minnesota’s economy is more sound than in a lot of other states.

“It’s much stronger than it was two years ago and stronger than it was a year ago,” he said. “I think you can attribute that to several things. First, I think the fact that we had a tough budget two years ago set the state up for a lot of confidence for this biennium to do some growing. We were able to reduce unemployment, and that helped pick revenue up.”

Dahms said it would be a mistake for the state to start spending any extra money in the current biennium, should the economy flatline.

“If the economy flattens out, we’re going to have some major issues before this biennium is over and certainly some major issues in the next biennium,” he said.

The chairman of the state’s E-12 schools finance committee said schools could be fully repaid by November.

Dahms said legislators should be able to focus on bonding during the 2014 session, which is about one month shorter than this year’s session.

“There shouldn’t be much to do with budgeting next year,” he said. “We’ll have some policy stuff to take care of, and we should be able to go into bonding. Hopefully we’ll get a bonding bill passed and be able to move forward.”

Swedzinski said the Legislature can not only zero in on a bonding bill next year but also on some policy changes, like energy, and changes within agencies dealing with permitting, rules and oversight. He said recent town hall meetings in the district shed light on concerns people have about childcare unionization, tax increases and local county aid funding. He said there is also lingering concern among the business community about taxes.

“We’re not really on firm standing when it comes to the business climate,” Swedzinski said. “The numbers may look good, but it’s not like this is long-term confidence.”