Local Lawmakers React to Increase in Project Budget Surplus

(KNSI) – The Minnesota Management and Budget Office says the state’s projected two-year budget surplus has grown to $9.25 billion. The new figures released Monday are $1.5 billion more than the December forecast of $7.7 billion. St. Cloud DFL Senator Aric Putnam told KNSI News what he thinks the state’s top priority should be.

“We have this massive hole in our Unemployment Trust Fund. If we don’t pay that back, we have to raise taxes, and that’s not good. And it’s not a decision we make, that’s a federal law, and that’s $2.7 billion.”

He says if the state doesn’t repay the $2.7 billion by March 15, Minnesota will be charged $50,000 a day from the federal government. Putnam says the increased surplus means there’s enough money to give all Minnesotans some money back.

“Given the size of the surplus, it’s a one-time opportunity to take care of some real problems that we’ve got and to show people how much we respect them and care about the work they did. That includes frontline workers who create the surplus and everyday Minnesotans who pay the taxes in the first place.”

Republicans want long-term tax cuts. Putnam says he won’t support permanent tax cuts because he believes it’s shortsighted.

“I don’t think that you make structural changes with today’s income. You don’t make massive cuts in the way things are always going to be because your checkbooks are full today. And you don’t go out and buy a brand new car and think you’re only going to make one payment. You’re going to have other payments that you have to make. Now, whether the surplus is a result of over-taxation? It’s not really. It’s a result of the difference between the forecast and what actually happened. That doesn’t mean that we aren’t overtaxed as a state, but that’s a different conversation. We can’t have a conversation in the context of the surplus because it just doesn’t work. So for me, I’m all about being responsible, being prudent, and thinking long-term. And in this case, I think that short-term tax decreases in the context of an election year is obviously in the context of an election year. I want to have conversations about whether or not we’re overtaxed, but that’s not about the surplus.”

Republican State Representative Shane Mekeland, Clear Lake, said the state is already fully funded for the biennium, meaning robust tax relief should be in store with the state’s excess revenue.

“The state government is fully funded for the biennium and has $10 billion left over. Meanwhile, Minnesota’s families and businesses are stretched thin by price increases in the Biden-Walz economy. We have a real opportunity this session to provide Minnesotans with meaningful, permanent tax relief, starting with ending our state tax on Social Security. We also must prevent businesses from absorbing a huge unemployment insurance rate increase on March 15. Anything less is unacceptable.”

Republican Representative Lisa Demuth of Cold Spring agreed says the projected surplus is good news and would also like to see tax cuts.

“This is a much better economic scenario for our state than the horrific shortfall projections issued earlier in the pandemic. While we avoided that crisis, a different set of issues has arisen. Namely, our state has a massive over-collection of tax dollars at a time when Minnesota families and businesses are struggling to make ends meet amid higher prices. We can help mitigate that pain by providing permanent, meaningful relief this session. The state’s government is fully funded for the biennium so there’s no excuse to not get these surplus dollars back in the hands of overtaxed Minnesotans. We can start by ending the state tax on Social Security.”

During the Legislative Session, the budget surplus is expected to be a political football as Democrats are floating a gas tax holiday and frontline worker pay. Governor Tim Walz wants to give the money back in a rebate check.

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