Reduced surplus to frame Minnesota budget fight

Projected surplus it $500 million less than expected.

Posted: Feb 28, 2019 6:39 PM

ST. PAUL, Minn. (AP) — Slowing economic growth and a deepening shortage of workers has shrunk Minnesota's projected budget surplus to just over $1 billion, administration officials said Thursday, leaving lawmakers nearly $500 million less to work with as they begin the struggle over the state's next two-year budget.

Gov. Tim Walz and other Democratic leaders said the updated forecast shows the need for more spending on education and infrastructure — as well as stepped up efforts to woo workers from other states — to grow the base of taxpayers. But Republicans said Minnesota's high taxes are the problem, and that the tax hikes Walz has proposed on gasoline and other items will only choke off growth and make the state less attractive.

"We must make investments that continue economic growth, and my investments in education, jobs and transportation will do just that," Walz said at a news conference Thursday.

The governor was touting the $49.5 billion budget and the $1.27 billion public construction borrowing plan that he announced over the past two weeks. The governor also said his administration will now go through his budget "line by line" to see if anything needs to be tweaked.

One of Minnesota's main problems, as outlined by Budget Commissioner Myron Frans and his team, is that national economic growth is projected to slow over the next two years, reducing projected individual income tax revenue growth for the 2020-21 budget from the forecast he released in December.

"Those are not the numbers I'd prefer to see, but they're numbers we can manage and work with," Frans said.

At the same time, they said, Minnesota's unemployment rate is so low — while retirements among baby boomers are accelerating — that the lack of qualified workers is hampering the ability of businesses to grow. State Economist Laura Kalambokidis said it will be important to lower barriers to entering the workforce, to make the state attractive to outside workers, and for employers to offer higher wages and more flexible workplaces.

"We do not have a deep bench of people on the sidelines in Minnesota, but we do need to make sure that everyone has an opportunity to join this workforce," Kalambokidis said.

The updated forecast is now the starting point as legislative leaders begin negotiating spending targets and hammering out a final budget before the session adjourns in late May.

Democratic House Speaker Melissa Hortman said the forecast shows the need to "double down" on spending for education to keep the workforce strong. And she noted that the forecast suggests the state could slip into a small deficit for the 2022-23 budget. She said the state needs to stimulate economic and workforce growth to ensure sufficient future revenue.

"This is a time to go big on a bonding bill," Hortman said. "This is a time to go big on transportation investments and create those jobs."

But GOP House Minority Leader Kurt Daudt argued, while acknowledging he had little evidence, that the biggest problem is that wealthy Minnesotans are fleeing the state for tax havens such as Florida. He blamed a tax increase on upper-income residents enacted under former Gov. Mark Dayton.

Republican Senate Majority Leader Paul Gazelka said significant spending increases during a downturn are unwise. He compared the lower revenue forecast to having to tell his wife he was facing a salary cut of 1 or 2 percent.

"What we would not do is immediately go out and binge spend," Gazelka said.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 549830

Reported Deaths: 7067
CountyCasesDeaths
Hennepin1145171675
Ramsey47380851
Dakota42007420
Anoka38065415
Washington24723273
Stearns20819218
St. Louis16620297
Scott15798117
Wright14643125
Olmsted1268297
Sherburne1046080
Carver970145
Clay777389
Rice7554101
Blue Earth690640
Kandiyohi623979
Crow Wing607986
Chisago543749
Otter Tail539373
Benton526097
Mower449532
Douglas438970
Goodhue438271
Winona437249
Nobles398748
Morrison391159
McLeod387854
Beltrami370557
Isanti370359
Itasca366052
Polk362467
Steele357714
Becker350248
Lyon346748
Carlton327052
Freeborn325029
Pine309221
Nicollet304142
Brown293139
Mille Lacs277350
Le Sueur268022
Todd267230
Cass247426
Meeker232737
Waseca229520
Martin211529
Wabasha19913
Roseau195518
Hubbard170541
Dodge17033
Renville169743
Redwood165435
Houston162114
Cottonwood155320
Fillmore15149
Pennington149519
Chippewa144636
Faribault142919
Wadena142721
Sibley134910
Aitkin127836
Kanabec127621
Watonwan12529
Rock121719
Jackson115910
Yellow Medicine110119
Pipestone109125
Murray10209
Pope10146
Swift98618
Marshall85317
Stevens80510
Lake78019
Clearwater76614
Wilkin76512
Koochiching76212
Lac qui Parle73422
Big Stone5594
Lincoln5572
Grant5438
Norman5209
Mahnomen4948
Unassigned48278
Kittson46222
Red Lake3857
Traverse3595
Lake of the Woods2993
Cook1440

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 356912

Reported Deaths: 5810
CountyCasesDeaths
Polk55819602
Linn20248329
Scott18949234
Black Hawk15517306
Woodbury14872220
Johnson1397781
Dubuque13115202
Dallas1087696
Pottawattamie10703162
Story1028547
Warren553586
Clinton536490
Cerro Gordo521186
Webster507991
Sioux505073
Marshall476874
Muscatine457896
Des Moines440665
Wapello4250120
Buena Vista421440
Jasper407670
Plymouth396779
Lee367755
Marion354375
Jones292955
Henry285937
Carroll279050
Bremer278960
Crawford262039
Boone257833
Benton249655
Washington249249
Dickinson240643
Mahaska224049
Jackson217842
Kossuth212362
Clay209825
Tama206571
Delaware202539
Winneshiek193933
Page190320
Buchanan188231
Cedar183423
Fayette182841
Wright180135
Hardin179242
Hamilton177949
Harrison175373
Clayton166655
Butler162434
Mills158020
Cherokee156738
Floyd155242
Lyon154341
Madison153519
Poweshiek152433
Allamakee149051
Iowa145324
Hancock143334
Winnebago135831
Grundy135032
Cass134354
Calhoun133111
Jefferson130535
Emmet128340
Shelby127337
Sac126819
Appanoose126647
Louisa126549
Mitchell125241
Union124032
Chickasaw122515
Humboldt118126
Guthrie117729
Franklin112521
Palo Alto110421
Howard102822
Montgomery100237
Unassigned10020
Clarke98023
Keokuk94430
Monroe93528
Ida89433
Adair84332
Pocahontas83321
Monona80930
Davis79924
Greene76410
Osceola75016
Lucas74922
Worth7078
Taylor65112
Fremont61210
Decatur5899
Van Buren55518
Ringgold53423
Wayne51923
Audubon4949
Adams3284
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