Building a Structurally Balanced State Budget

After 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. In 2016, the legislature continued its responsible stewardship of the budget and resisted temptations to “spend” or “tax cut” our budget back to deficit.

The state Senate took office in 2013 facing $3 billion in deficit, 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.

Investing in Education

Following nearly 15 years of flat funding for education, this state Senate has added over $1 billion to Minnesota’s E-12 system. This approach not only expands opportunity for students and helps school districts strengthen budgets, it also provides indirect property tax relief for all Minnesotans. In addition to repaying the $1 billion school funding shift, our state Senate:

  • $600M formula funding increase
  • Flexible early childhood investment
  • Equitable funding for all-day K
  • Location equity aid
  • Long-term facilities aid
  • Teacher licensure & recruitment reform
  • Special education mandate assistance
  • State college & university tuition freeze
  • Expanded student support staff
  • Student loan forgiveness

Education is Minnesota’s competitive advantage in an increasingly competitive global economy. Our commitment to education investment will benefit Minnesota students, families, businesses, and property tax payers for years to come.

Border-to-Border Broadband Fund

Roughly 25% of homes in Greater Minnesota lack Internet connectivity at basic speeds and reliability necessary for real-world applications for home-based business or teleworking, distance learning or telemedicine. In the 21st century, this connectivity isn’t a nicety, it’s a necessity.

Over the past three years, the state Senate has invested over $65 million in Senator Schmit’s incredibly successful “border-to-border broadband” competitive grant program, which in its first two years extended critical Internet connectivity to roughly 10,000 homes, over 1,000 businesses, and hundreds of community anchor institutions – such as libraries, schools, and hospitals. Importantly, the program thus far has leveraged over $40 million in non-state investment.

Three projects in Goodhue and Winona counties have received funding, with many more in southeastern Minnesota and around the state in line for expanded connectivity this year and beyond.

The state’s new broadband fund addresses a market failure – in this case, a situation where private investment capital is limited but consumer demand is strong, if not geographically concentrated. This approach is analogous to the incredibly successful effort to extend electricity to rural America a century ago. Imagine life without electricity. Broadband is no different.

As much as any other issue at the Capitol, broadband funding has brought people together to get things done – breaking traditional political and geographic barriers that oftentimes serve to divide rather than unite legislators and those they represent. Without doubt, expanded broadband investment is a proven and promising development at the legislature – and all around the state!

© 2020 Matt Schmit for State Senate