Minnesota added more stuffing to its financial cushion to soften the impact of tough economic times.
On Tuesday, the start of a new fiscal year, the state boosted its budget reserves to $811 million. The reserve amount, which will be automatically increased if the state has budget surpluses, is now at the highest level in state history.
The budget reserve fund, which long stood at $653 million, serves as the state's savings account for tough times. During budget downturns, governors and Legislatures pull cash from the fund to backfill deficits.
The extra $150 million in the bank gives the state's ledgers a bit more leeway should accounts turn in the red again.
DFL Gov. Mark Dayton and his chief financial steward cheered the cash boost.
“Increasing the budget reserve helps the state manage economic risk and is viewed positively by the state’s bond rating agencies,” said Minnesota Management and Budget Commissioner Jim Schowalter.
The move to lift the reserves and make future increases automatic was little noticed during this year's legislative session, when focus was centered on minimum wage, medical marijuana and building projects. But budget watchers say it could give Minnesota long term stability to ease the periodic dips in state finances.
“Minnesota has finally turned the corner on a decade of deficits that shortchanged our students and stymied needed progress for our state,” Dayton said.
Dayton opponents have said Minnesota has seen an upturn in finances because the state, under Dayton, have untenably increased taxes. They also note that recent monthly budget updates have shown the state not meeting forecast expectations.
"Governor Dayton and Democrats have committed Minnesota taxpayers to historic spending increases and ignored early warning signs. These early indications show Minnesota’s economy is not responding favorably to Democrats’ policies of increasing taxes and wasteful spending," House Minority Leader Kurt Daudt, R-Crown, said last month.
The state's latest revenue update, reported in early June, found that Minnesotans paid more than $1.4 billion in state taxes in May, about $17 million less than state budget officials predicted. The state had taken in $16.8 billion for the fiscal year, about $95 million below the forecast.