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Schmit, Kelly say state forecast is positive

Local lawmakers say while Minnesota’s projected surplus is tentative, it’s good news.

“I think it’s a testament to the fact that our economy is rebounding strongly and outpacing the rest of the country in many regards,” Sen. Matt Schmit, DFL-Red Wing, said.

State officials released a budget and economic forecast Thursday that projects a surplus of $1.086 billion at the end of the two-year budget cycle. After repaying money owed to schools in full and replenishing an airport fund lawmakers borrowed from years ago, $825 million is left.

But officials warned it is still early to say whether these numbers will hold steady in the future, and another forecast is planned early next year.

“This isn’t money in the bank yet,” Schmit said. “We’ll want to see what the February forecast shows.”

Still, lawmakers are coming up with plans as they look ahead to the next legislative session, slated to begin Feb. 25.

Both Rep. Tim Kelly, R-Red Wing, and Schmit said the forecast allows the Legislature to look at changes such as repealing warehouse and business-to-business taxes.

“I think it will allow us to focus on those things where we have some agreement,” Kelly said, noting a top priority for him is repealing the warehouse tax. “It just gives us some breathing space.”

“These are preliminary numbers right now, but I would say that if we have a sizable surplus that providing thoughtful tax relief is going to be a priority for folks on both sides of the aisle,” Schmit said.

Gov. Mark Dayton said he will wait for the February forecast before submitting any proposed budget revisions to the Legislature. But if the positive outlook holds, Dayton said he would propose eliminating all three business-to-business taxes passed last session and providing tax cuts for middle-class Minnesotans.

Some Republicans said other changes should be explored as well.

“This surplus calls into question the wisdom of burdening the economy with higher tax rates,” Senate minority leader David Hann, R-Eden Prairie, said. “When the session begins in February, we need to revisit the Democrat tax increases and fix their mistakes. They were clearly unnecessary."

Dayton said the forecast showed the plans from Democrats, who are in the majority, were successful.

“Critics claimed that this balanced fiscal approach would have a chilling effect on Minnesota’s economy. Today’s forecast proves those critics wrong,” he said.

While legislative leaders had some opposing views on the meaning of the forecast and what impacted it, Kelly said it’s time to move forward rather than place blame or take credit.

“I do believe it’s policies that both parties have put into place that put us into a good position,” he said.

Overall, Red Wing-area lawmakers said the surplus and forecast is good news for the state and an indicator the economy is strong. It sets the stage for the upcoming session and opens up room for negotiation on taxes and other issues.

“I think mainly it will reduce tension and the pressure of the session,” Kelly said. “And I think that may be one of the benefits of it.”

Danielle Killey

Danielle Killey covers local government for the South Washington County Bulletin. She has worked as a reporter for other Forum Communications newspapers since 2011. She graduated from the University of Minnesota-Twin Cities with a journalism degree.

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