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Legislative News and Views - Rep. Paul Anderson (R)

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Initial COVID-19 impacts felt as many unknowns remain

Monday, March 23, 2020

By Rep. Paul Anderson

In a matter of weeks, the world and its economy have been turned upside down by the COVID-19 outbreak. Every segment has been affected, some more than others. Cruise lines have been shuttered, and airlines are still operating but with fewer passengers and huge financial losses that threaten their survival. 

Main streets are eerily quiet, as are our roads and highways. That directly affects our local economy as restaurants and bars have been ordered to close. With fewer people driving, either to work or for pleasure, the price of gasoline and diesel fuel have dropped precipitously, and in the short term that's good. But, as gas has dropped below $2 per gallon, it has caused a financial hammer to fall on our ethanol industry. With the wholesale price of gas around 70 cents and ethanol under a dollar per gallon, it doesn't encourage the blending of our corn-based renewable fuel. With demand down, the price of ethanol has fallen to levels never seen before. 

Losses are mounting, and plants will either be forced to slow production or shutter completely. As that happens, the demand for corn also decreases and the price offered for the grain will also fall. We have seen 20-cent declines in the price of corn in recent days as it has fallen under $3 a bushel, which is well below the cost of production.

As of Sunday, 169 confirmed cases have been reported in Minnesota, an increase of 22 from the previous day. Our state recorded its first fatality over the weekend, that occurring in Ramsey County. Since this all started, a total of 19 patients have been hospitalized, and six are still currently receiving care, four of whom are in ICU. The remainder of those hospitalized are recovering at home.

In recent days, I have received numerous messages saying we need to increase state spending in a variety of different areas. Nearly all mention that we should utilize our state's $1.5 billion surplus to cover these new or expanded initiatives. I'm not saying they aren't worthwhile, but we need to have an honest conversation about the state budget. That much-publicized surplus is a PROJECTED surplus, meaning that if all spending and revenues that were thought to be accurate in February held true until the end of the biennium, we would have that much money left over.

Obviously, that's not happening. In Minnesota, we've just passed two bills that provided around $220 million in the fight against COVID-19, with more probably to come. And we've opened up the state's unemployment insurance program to the thousands of laid-off workers who now qualify for immediate benefits. The biggest change, however, is what's happening to state revenue. With business activity slowing, sales tax receipts will also decrease markedly. That's the immediate impact of the executive order closing bars and restaurants, but all business activity is being affected. Fewer people driving will mean lower gas tax receipts coming into the state. Lower incomes brought on by lay-offs will result in fewer income taxes being paid. And huge losses in the stock market will translate into capital gain losses, which also lower taxable incomes.

I think what's been done so far to slow the virus is warranted. However, closing the state down completely except for essential businesses is going too far. How essential business is defined will be important. Our grocery stores need to stay open, and the truckers who keep those supply lines going are also extremely important. With spring coming, aren't our implement dealers and repair shops also essential? What about our other agri-businesses that serve farmers with the crop inputs they need? Aren't they essential?

My point being, where does one draw the line on what's important to keep operating? Three states have so far implemented this stay-in-place order, those being New York, California, and Illinois. All three have populations much larger than ours. The states of Kansas and Missouri have worked together to implement a similar order around the Kansas City area, but it's only for the metro and surrounding areas and not the entire states. That makes sense to me, as an urban center with a much more dense population, would seem to be at greater risk of having the virus spread by human contact.

The entire world is fighting COVID-19 together. We pray the measures taken so far are effective and the virus peaks soon and begins to diminish.

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