Minnesotans, you’ve earned it. Take a moment to savor Friday’s news from the State Capitol: The Minnesota economy is improving so rapidly that its state tax collections forecast for 2016-17 grew by 1.5 percent — $616 million — in just the last three months.
Economic news that good has been a long time coming. It gives lawmakers a forecast $1.87 billion surplus in the state’s 2016-17 biennium — the largest such prediction in state history. It should set up a more positive biennial budget-setting exercise at the Legislature than Minnesotans have witnessed since the heady days of the dot-com bubble 15 years ago.
You’ll note that we said “positive,” not “peaceful.” With Republicans in charge in the House and DFLers holding the Senate and the governor’s office, contention over the next state budget is guaranteed. But the fights will be over how best to cut taxes and increase spending for Minnesota’s benefit. If leaders of both parties and Gov. Mark Dayton are willing to find room for compromise on their priorities, that’s bound to yield a more pleasing result than did years of Capitol quarrels over whether to raise taxes, cut spending or borrow from the future.
The challenge for lawmakers in the two and a half months remaining in the 2015 session will be to not only please today’s Minnesotans, but also to act in the best interest of their children and grandchildren. Lawmakers will do well to budget for the long-term. Setting the table for the future is a primary purpose of state government. Legislators will be tempted to produce quick tax cuts and/or spending surges. But if they do so at the expense of long-term investments in human capital and infrastructure, they will shortchange Minnesota’s future.
Dayton is positioning himself to be a force for the future in the budget debate that now begins in earnest. He said Friday that he’ll update his 2016-17 budget proposal to double down on education. He’ll put $238 million more on the table for preschool expansion and add $152.5 million to his higher ed request — enough, he said, to keep tuition at state colleges and universities flat for another two years. (The Minnesota State Colleges and University System, omitted from his earlier budget because of a dispute between the faculty and the chancellor, is now back in, through what Dayton called a “leap of faith.”)
The governor also voiced willingness to spend more in other areas. Dayton’s initial proposal was stingy with several other state services that have not yet recovered from recession-era cuts. Assistance for vulnerable people — the frail elderly and the disabled, impoverished and endangered children, and mental illness sufferers — deserves serious consideration.
While some Republican legislators have attached their names to bills that increase such spending, GOP legislative leaders indicated Friday that their top priority for the newfound state surplus will be tax reduction. Their preference, said House Speaker Kurt Daudt, is for general rather than targeted tax relief. It’s the same thinking that sent modest “Jesse checks” (named for then-Gov. Jesse Ventura) far and wide, just before the 2000 election. A better idea would be tax relief more targeted at spurring job growth and innovation where it’s needed most.
Republicans on Friday also doubled down on an earlier position: With the general fund surplus this large, they said, there’s no need for a higher gas tax that Dayton favors, which is dedicated to the state highway trust fund. Rather, they’ll seek to direct some of the general fund surplus to highway purposes.
For Minnesotans trying to cope with inadequate transportation infrastructure, that’s good news and bad news. It’s good that lawmakers are set to debate not whether to spend more on transportation, but how and how much. But it’s unfortunate that they begin that debate with such drastically differing notions — and that GOP notions do not appear to include either improvements in transit or the long-term, steady stream of funds that the dedicated gas tax produces.
In the next six weeks, the House and Senate majorities will need to convert Friday’s rhetoric into concrete proposals that they can take to conference committees in late April. For legislators, these will be weeks loaded with pressure to spread the surplus far and wide, in ways that voters will notice by Nov. 8, 2016. We hope these are also weeks when voters implore lawmakers to look ahead to 2026, 2036 and beyond.