Thursday, December 05, 2013

Happy MN Forecast Day!

Thursday was the day the Minnesota Department of Management and Budget released its forecast for the upcoming biennium. It turns out, there is a projected surplus of $1.086 Billion for the current biennium.

Naturally, the Democrats and their supporters jumped around like poo flinging monkeys did a proverbial victory lap, feeling vindicated that the state having been under complete DFL control for the past 11 months was just the antidote the ailing Minnesota economy needed.

On the flip side, many Republicans and their supporters dug deeper into the numbers, much to the chagrin of Dayton's Deputy Chief of Staff Bob Hume.

Of course, Bob. But since your boss is so hellbent on doing an end zone happy dance, we thought we'd provide a little context. That's only fair, especially since y'all are chortling about a surplus after a legislative session that saw more than $2 Billion in tax increases.

When the Dayton administration released its statement lauding the results, they highlighted the fact that $246 million of the surplus will be used to pay the balance of the school shift (the amount of money borrowed from funds designated for public schools). Naturally, there were key facts omitted from that proverbial pat on the back. In 2010, when Dems held both chambers of the legislature, $1.9 Billion was shifted from schools. In the infamous budget battle of 2011, when the GOP controlled both chambers, $900 million was shifted. So of the $2.8 Billion borrowed, about $880 million ($636M in 2013, $246M next year) was repaid with the DFL in control, or only about 32%. So if Dayton et al want to refer to "irresponsible borrowing from Minnesota students" then it should be noted the DFL OK'd the vast majority of the total shift while the Republicans took the initiative to pay back more than two-thirds of the total.

Another result accentuated was how Minnesota has "added 13,400 jobs since August and over 122,000 jobs since January 2011 –  regaining all of the jobs that were lost in the Great Recession."

Again, the devil is in the details.

While it may be true that the quantity of jobs lost has been regained, can we honestly say they're of the same caliber in terms of salary, benefits, etc.?

Rep. Kurt Zellers (R-Maple Grove), who is also one of the GOP candidates for MN governor, summed up the overall results brilliantly.

“After raising more than $2 billion in taxes on Minnesotans -- including new taxes on online purchases, warehousing, broadband, farm equipment repair and rental cars -- Governor Dayton and DFL legislators are now celebrating a $1 billion surplus. Their inability to understand basic math is topped only by their desire to spend taxpayer money on wasteful and unnecessary projects like a new $90 million office building for elected officials with a fitness center and reflecting pool.

“Recently we also learned that the property tax decreases promised by Dayton is a fallacy. The fact is, along with the more than $2 billion in tax increases imposed by Dayton and the Democrats in the legislature, hardworking Minnesotans will be facing property tax increases in 2014 and beyond.

"While some politicians are busy patting themselves on the back for a surplus, let's remember government's goal should not be to take in the most money possible, but to spend the money they have more efficiently and effectively. It's time to return accountability and common sense to state government.”

Spot on. Minnesotans don't exactly feel the benefits of a budget surplus, especially in light of such substantial tax increases to make it happen. Contrast that with the budget for FY 2012-13, passed by the GOP legislative majority. That yielded a $3.4 Billion surplus without having raised taxes one dime.

So in the end, can we be pleased we have a surplus? I can honestly say it's a heckuva lot better than a shortfall, especially since the DFL reaction then would've been to propose more tax increases.

But since there is a surplus, will Gov. Dayton now honor his vow of repealing certain taxes (e.g. taxes on farm equipment repair and warehouse tax) next legislative session? After all, the forecast results say we'll still net $840 million after the school shift is repaid in 2014. It's an intriguing strategy to say the least. Dayton signs a repeal of tax increases which he approved in the final budget in May but later claimed he wasn't aware they were in said budget. In the end, Dayton can claim to be a hero......and in an election year no less. Brilliant.


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