$2 billion surplus in MN state budget

"MN Budget"

11/29/2006

Minnesota finance officials expect the state treasury to run a $2.17 billion surplus through June of 2009.


Brian Bakst, Associated Press


Minnesota finance officials expect the state treasury to run a $2.17 billion surplus through June of 2009.
That includes a projected surplus of $1.038 through June of next year, and $1.132 billion for the following two years.


"We've got some pretty good news here,'' Finance Commissioner Peggy Ingison said before she outlined the numbers at a Capitol news conference Wednesday.


The economic report details tax and spending patterns. The news means GOP Gov. Tim Pawlenty and a Legislature now in DFL hands will have extra money to devote to schools, public health care programs and, maybe, tax cuts.
The figures sound large. But inflationary increases in current programs would eat up much of the projected 2008-09 surplus if lawmakers were to enact a budget similar to one presently in place.


The November edition of a twice-yearly economic forecast will guide Pawlenty as he assembles a two-year budget for consideration in the 2007 legislative session. On Tuesday, Pawlenty — who confronted a deep deficit in his first term — said he would be cautious with the expected surplus.


"We are not going to have a reckless spending spree,'' he said.


The surplus should trigger a 1999 law requiring the governor to come up with a proposal to rebate the money to taxpayers, but the Legislature can adopt, modify or reject the plan. Pawlenty has said he would rather see permanent tax relief than a one-time rebate.


Rep. Loren Solberg, a top House DFLer on budget matters, said Tuesday he didn't think legislators or the public wanted a rebate at the expense of other priorities.


"We're going to be very fiscally cautious and keep our eye on the problems that have been expressed to us,'' Solberg said, putting property tax relief and school funding at the top of his list.


The surplus is measured by the amount of money unspent when the state's fiscal year closed in June and projections of tax revenue and spending obligations down the road.


Dan McElroy, a former finance commissioner under Pawlenty, pointed out the forecast doesn't take into account the expected inflation in state programs due for reauthorization next spring. He avoids using the word surplus to describe the positive balance.


"Surplus implies psychologically that it's `extra money' — money that the government doesn't need, money that should go for tax rebates or tax cuts,'' he said, adding, "The money on the bottom line isn't extra or frivolous dollars. It's money that in the past would have been baked into the forecast for inflation.''


While Pawlenty will fashion his budget from this report, legislators usually wait until a new version is released in late February or early March before passing tax and spending bills.