When Matt Schmit began his first term in the MN State Senate, Minnesota was still grappling with a decade of recurring deficits, cuts to local aid and school funding, and increased property taxes, the state’s budget is strong and stable.
The legislature’s most important job is to maintain Minnesota’s budget. Between 2013 and 2016, the legislature resumed its responsible stewardship of the budget and resisted temptations to “spend” or “tax cut” our budget back to deficit.
In 2013 Minnesota faced a $3 billion budget problem that included direct deficit, one-time shifts, and unaccounted-for inflation. We solved that problem, but we don’t want to make rash short-term decisions that jeopardize the state’s newfound budget stability. Rather, we recognize the combination of inflation and “one-time” funds reduces Minnesota’s projected budget surplus dramatically.
When taking inflation into account by looking at the present value of future revenues, the budget surplus shrinks considerably. Proposals to devote significant state general fund dollars to transportation funding or tax cuts risk another state budget deficit.
Experts say Minnesota underfunds its roads and bridges by as much as $1 billion annually. It’s reasonable to tap some of the budget surplus or one-time funds, but this approach only addresses half the problem. And the shift would threaten to create an ongoing hole in the general fund.