Opinion editor’s note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.
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Thanks to the productivity of taxpaying workers and employers in Minnesota, the state is now expected to have a $3.7 billion surplus for the 2024-2025 biennium.
Even though that’s $1.3 billion more than the December forecast, lawmakers should be in a savings mode. The new estimate released Thursday by Minnesota Management and Budget (MMB) also reflects a structural deficit in the next biennium of nearly $1.5 billion. Part of this is due to spending exceeding revenue by about $636 million over that two-year span, and part of it is due to inflation — which, as the last few years have shown, can rise quickly due to events well beyond the State Capitol’s control.
Holding the line on new spending — and, as crucially, new taxes — is in the hands of the DFL-controlled Legislature and DFL Gov. Tim Walz, and the legislative and executive branches should proceed prudently during the ongoing legislative session.
That is especially the case after last year’s landmark session, which drew down most of the projected $17.5 billion surplus on mostly worthy initiatives. But, as the Star Tribune Editorial Board urged before lawmakers convened in February, this even-year session, by design, is supposed to focus on fixing previously passed legislation, conducting oversight and planning, as well as directing longer-term capital investments through a state bonding bill — which still will, after all, be “new” spending.
“It is worth noting that caution should still be exercised this session when it comes to ongoing spending,” Management and Budget Commissioner Erin Campbell said at a news conference following the release of the report. “The imbalance will need to be addressed in the biennial budget.”
Addressing this imbalance may occur, in part, through higher-than-anticipated revenue that would be reflected in future forecasts. But lawmakers shouldn’t jeopardize the chance of that fortuitous outcome by further burdening the state’s business community, which already is contending with changes and challenges from some of last year’s legislation. After all, it’s a positive sign for the state’s economy that most of the projected $1.3 billion is due to corporate tax revenue, which, MMB said in a statement, “shows the largest change, driven by higher-than-expected corporate profits through the forecast horizon. Spending estimates are largely unchanged from November.”
