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Legislative News and Views - Rep. Joe Schomacker (R)

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Wednesday, March 9, 2016

ST. PAUL – State Representative Joe Schomacker (R-Luverne) said there were positives and negatives to be found in Minnesota's recent state budget forecast.


The good: state economists recently projected Minnesota to realize a $900 million surplus. The not-as-good: the total is roughly $300 million lower than the last estimate that was released in November.


"It's always better to have a surplus than a deficit, but it is discouraging to see this much change in a three month period," Schomacker said. "This should serve as a good reminder to all that our state's economic condition can change very quickly based on any number of factors that occur at the state or federal level."


According to the Minnesota Management and Budget Office, Fiscal Year 2016-17 revenues are now forecast to be $42.298 billion, a $427 million decrease (1.0 percent) compared to November 2015 estimates.  Current law spending is forecast to be $41.523 billion, $129 million (0.3 percent) lower than prior estimates. 


Lower than expected income growth reduced individual income tax receipts by $95 million. Lower than expected sales tax growth combined with higher projected refunds reduced the general sales tax forecast by $311 million. Slower forecast corporate profit growth took $93 million out of the corporate tax forecast. 


In addition, less momentum at the end of 2015 contributed to a weaker U.S. economic outlook. There were three negative influences: a glut of business inventories, depressed oil-related investment, and the drag on global trade from the stronger dollar.


So while Schomacker is optimistic about the significant surplus, he believes it must be allocated with caution.


"This is basically the same total we left on the bottom line at the end of the 2015 session," Schomacker noted. "Thankfully the House Republicans prevented Governor Dayton and Senate Democrats from spending it all because if they had, we'd be now be facing a deficit and spending cuts."


"In the coming weeks, we'll need to keep the interests of the taxpayer in mind as we look for the best ways to utilize this surplus while recognizing the latest economic trends," Schomacker concluded.