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Continued: Minnesota budget surplus grows to $1.23 billion

  • Article by: BAIRD HELGESON , Star Tribune
  • Last update: February 28, 2014 - 9:38 PM

“That is a good place to be,” Minnesota Budget Director Margaret Kelly said.

Any new spending or tax relief this session would likely lower that number, however.

Global Insight said there are still potential risks that could drag down the state’s economy. Weak growth from trading partners in Europe and China could hurt growth, along with financial and health care reforms coming online early this year.

Kalambokidis said economists believe that a punishing winter has slowed the economic momentum a bit, but would be remedied by a spring thaw that would bring out shoppers and spur business. There is a small chance the sluggishness could continue, she said, possibly signaling a larger economic slowdown.

Legislators eyeing the new windfall are already sizing up the best ways to spend it.

House leaders want to quickly set aside more than $500 million for tax relief, some of it retroactive to 2013. That would have to be booked as spending in state budgets. The tax relief targets middle-class families and small collections of businesses that got socked with new sales taxes on warehousing services and telecommunications equipment and repair. A coalition of Democrats and Republicans want to use a significant share of the money to bulk up the state’s budget reserves as a bulwark against future downturns. Some legislators are looking to bolster transportation spending, or increase state borrowing for construction projects around the state.

Who gets credit?

That fight will largely define the next two months of the legislative session and stretch through the campaign season.

Republicans, who are in the minority in both the House and Senate, favor returning the money to taxpayers. They say the surplus proves that Democrats muscled through too many tax increases last year and now are attempting to get credit for giving it back.

“This money does not belong to the Minnesota government, it belongs to Minnesota taxpayers,” said House Minority Leader Kurt Daudt, R-Crown.

“I think it’s ridiculous to assume the budget that was passed six months ago is responsible for the positive forecast today,” said Senate Minority Leader David Hann, R-Eden Prairie. Repealing tax laws, he said, “is not enough to correct the mistakes that were made last year.”

House Speaker Paul Thissen said the strong forecast has soundly debunked GOP claims the tax hikes would sink the economy.

“They’re wrong,” said Thissen, DFL-Minneapolis. “This budget surplus shows it’s time for the Minnesota Republicans to stop rooting against Minnesotans and rooting against our economy.”


Staff writers Abby Simons and Jim Ragsdale contributed to this report.

Baird Helgeson • 651-925-5044


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