Minnesota Budget Surplus Shows Businesses Overtaxed, Local Republicans Say

The Minnesota Office of Budget Management released its 2014 projections and the state should be operating with a $1 billion surplus in the next fiscal year. While that’s a reprieve from a $2 billion shortfall the state was facing just three to four years ago, it’s a divisive issue in its own right as the state looks to have a stable budget.

Both Republicans and DFL members are pointing to inevitable tax cuts in light of the extra revenue. Gov. Mark Dayton has actually agreed with a Republican call to eliminate business taxes that were passed during the 2013 session.

“If this forecast holds,” Dayton said, pointing to a revised forecast that is due in February, “I expect to propose the elimination of all three [business to business] taxes, effective April 1, 2014, at a cost of $231 million for the biennium.  My other priority is a tax cut for middle-income Minnesotans by, for example, conforming to all of the federal tax cuts, which would cost about $205 billion for this biennium.  That would include eliminating the marriage penalty, which would reduce state taxes for 640,000 Minnesota taxpayers”

The first priority with the surplus, however, will be to pay back Minnesota schools. The state borrowed nearly three-quarters of a billion dollars over the 2012-13 biennium from schools. Now, state law requires the balance of that, around $246 million, to be paid back with a portion of the surplus.

While that’s a start, Rep. David Fitizsimmons of Albertville said the extra money gives Minnesota a chance to overhaul education funding.

“This also allows us to take a fresh look at more equitable school funding formulas that disadvantage our local school districts,” Fitzsimmons said. “ also believe we can push for further investment in transportation infrastructure that has a high return on investment.  We need to follow up the planned six-lane I-94 expansion to St. Michael with similar expansion to Albertville and the addition of an interchange at Brockton and I-94.”

Sen. Mary Kiffmeyer echoed Dayton’s move in repealing business to business taxes, something she said Republicans never did when they controlled the state’s top seat because taxes on “job makers” are punitive.

“The $2.4 billion in taxes amounts to about $450 for every man woman and child in Minnesota. Removing that spending from consumers, drags down the economy and puts our MN budget at risk for the future,” she told Patch. “I think it’s Interesting that the previous GOP budget raised no taxes or fees but generated a surplus. Economic vitality does more for government revenues than punitive taxes on business or individuals.”

The 2014 Legislature convenes at the end of February.