Much excitement swirled about the $1.5 billion state budget surplus (“Budget surplus swells to $1.5B,” Dec. 7).
Not so fast.
Yes, we do have money in the bank. Quite a lot of it. However, the “structural” money, which is the equivalent of a family’s expected cost-of-living raise, is only 57 percent of that $1.5 billion for the next biennium, or $873 million.
Worse yet, that structural money drops to $456 million for 2022-23. That will be like that family knowing a pay cut is coming.
And besides that, our economists warn us that the economy is weakening some, and there are major uncertainties concerning trade, workforce and the diminishing effects of the federal tax law.
The truth is, Minnesota can barely afford to take on much in the way of new ongoing expenses. The family can buy a used car for cash, but should be very careful about taking on large, long-term new car payments.
By the way, general inflation for the state budget is pegged at $1.1 billion. That is like our family’s gas/electric bill, tuition costs and ARM mortgage payments going up.
Suddenly we don’t feel so rich.
There is one more major issue that has been nearly overlooked. We have a huge pending liability coming up in the Health Care Access Fund. Within 2 years, we are going to have to find a way to cover health care costs of more than $650 million. Every year.
Those costs are currently paid for by the 2 percent “Provider Tax,” enacted in the early 1990s to pay for MinnesotaCare, originally designed to be low-income working families’ source for health care. The tax has been controversial ever since. It was repealed with little fanfare in 2011 by Republicans with the agreement of Gov. Mark Dayton, effective in 2019. However, even knowing its $650 million annual provider-tax receipts were going away, both parties made decisions to spend unsustainable money out of the fund that drained it to zero. Now we face these huge deficits.
Some will suggest to simply reinstate the tax. But it is really a direct tax on hardworking middle-class people without insurance, or those who pay cash for their health treatments. Like many farmers and small-business employees who might make $75,000 a year but who cannot afford to pay the $30,000 bill for their insurance. It is truly a tax on the sick and the uninsured. In fact, the sickest people pay the most.
It needs to stay repealed, and we need to find a better way.
There will be a robust debate about how to spend our surplus and fix our health care problems.
However, all parties must remember that we have less money than the headlines declare and many serious problems to solve. The sad truth is that providing free or below-cost services to a large group of people is not free. Somebody has to pay. And while slogans win elections, they do not solve real problems.
It is a time for robust, inclusive debate, for focus on sound fiscal decisionmaking, for difficult but wise choices and for commitment to the people of our great state. It is time for bipartisan cooperation and problem-solving to arrive at real solutions that will stand the test of time.
It is what Minnesotans want, and what they deserve.
Jim Abeler, R-Anoka, is a member of the Minnesota Senate.