Minnesota State Senator Tom Neuville

I am encouraged by the report from the Minnesota Department of Finance that the state has a projected $l.038 billion budget surplus, a sign of the good health of Minnesota’s economy. 

This is great news, not because the state needs to take any more of your money than necessary, but because it means Minnesotans are working and businesses are prospering. Thirteen straight months of better-than-expected revenue means our economy has rebounded since the recession of 2001 and the effects of the Sept. 11 terrorist attack.

From the various categories of taxes, the largest portion of the additional revenue, $503 million, is from higher individual income tax payments. Minnesota’s economy is still adding jobs, unlike the national economy; our unemployment rate of 3.9% is the lowest in five years. Put another way, we have the highest employment rate—96.1% of Minnesotans who want to have a job. The second largest chunk of tax receipts came from corporate income taxes.

That’s what I call a ‘rising tide.’ More people working and paying taxes at a tolerable rate and new or expanding, profitable businesses mean, in part, more revenue into state coffers to pay for the necessary services that Minnesotans expect.

In the 2003 session the Legislature filled a $4.5 billion hole in the biennial budget without raising taxes and resolved shortfalls of $160 million in 2004 and $466 million in 2005. Since the 2004 session adjourned, the state has taken in $2.45 billion more than the official forecasts.

Some Minnesotans were not convinced that the Governor’s “No New Taxes” pledge was the right way to do business. In fact, I believe it gave businesses and investors the confidence to add workers, buy new equipment, or invest in start-up companies without fear that government would come in and take away more of their available capital.
 
Along with this substantial surplus, we now have $1 billion in the bank–$350 million in a cash flow account and cash reserves of $650 million. We also paid back an $800 million loan from school districts that we used to help solve a $4.5 billion deficit in 2003.

If the amount of a state budget surplus is more than one-half of one percent of total general fund revenues, the Legislature is required by law to consider tax rebates. A $l billion surplus easily surpasses that threshold since the state will have collected more than $30 billion to support the current biennial budget. The State of Minnesota has returned surplus revenue twice in recent years. The state returned $1.2 billion to taxpayers in 2000 and $635 million in 2001.

The voters told us they want us to spend more on education and property tax relief. I will encourage the legislature to consider this $1 billion surplus a down payment on those two items when we begin to prepare our next budget in January.

I was proud to be part of a Legislature that insisted on serious fiscal discipline with the money we collect from taxpayers in 2003. That discipline is what allowed our economy to recover. I am even more proud of the hardworking, creative, energetic people of Minnesota who can take credit for our good economic health.