Minnesota has a $900 million budget surplus in the general fund forecast between now and mid-2017, the state’s official forecast says. But at least half of that sum is a one-time windfall that won’t return on future balance sheets. It ought not be used for ongoing spending or tax relief.
What’s more, the state’s fiscal future isn’t as bright as it once was, amid increasing warnings about a slowing national and global economy. The most recent state revenue forecast shaved $600 million off expectations for 2018-19. The most recent monthly individual income tax collections registered a 6.5 percent drop from expectations.
Those cautionary notes bear emphasis this week as Gov. Mark Dayton and legislative leaders grope for compromises on the 2016 Legislature’s major bills. Dayton announced Monday that he’s willing to move $200 million per year in each of the next 10 years from the general fund to the state’s highway fund, which can be spent for roads and bridges but not transit. “That’s the maximum I believe we can afford,” he said.
We concur: $200 million should be the ceiling on a recurring commitment for transportation from the general fund. Any tapping of the general fund beyond that amount should come on a one-time basis.
Minnesota’s transportation needs are genuine and growing, but they do not justify repeating the fiscal management mistakes of 15 years ago. Then, as economic storm clouds gathered, state leaders locked in more education spending and deeper tax cuts than forecasts justified. After years of surpluses, lawmakers bet on the come. They lost, and Minnesota endured a dozen years of recurring deficits. A spike in property taxes and college tuition and an erosion in government services ensued.
Dayton takes deserved pride in the fiscal stability that has returned to Minnesota on his watch. He and his fellow DFLers must not succumb now to the temptation to rock that boat for the sake of a transportation bill that meets his target of $600 million per year for the next 10 years. At $200 million per year, his ongoing general fund drawdown for transportation is already two and a half times more than the Star Tribune Editorial Board recommended last month.
Temptation aplenty is being offered by the House Republican majority, which wants $300 million in 2017 and more in subsequent years to be drawn from the general fund for highway purposes. But, perhaps unintentionally, House Speaker Kurt Daudt made plain last month that the GOP’s intention is not only to pay for smoother roads and safer bridges, but also to “starve out” the general fund, which pays for education, social services, state agencies and more.
Dayton and DFLers should guard against putting the general fund on a starvation diet in future years. And Republicans should know that they share a responsibility to keep the state’s books balanced and its services fully functional. If that means employing one-time money to seal a transportation deal this week and vowing to revisit transportation financing as the next biennial state budget is set, so be it.