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Legislative News and Views - Rep. Nathan Nelson (R)

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Wednesday, December 2, 2020

It's great to be heading back to the State Capitol again as your state representative, and though session begins in early January, the work has already begun. House committees are being restructured and assignments are being redistributed among returning and newly-elected members.


Much of our time will be spent analyzing the state's budget for the next two years. Most of us braced for an awful report when the state budget forecast was released on December 1, and while the news wasn't all good, it wasn't all bad either.


For the budget cycle that ends in June, Minnesota now projects a $641 million surplus. For the 2022-23 budget period that begins in July, state economists project our state to face a $1.273 billion deficit. Earlier projections showed a $2.4 billion deficit for our current budget cycle, and the upcoming budget cycle had a revenue shortfall of $4.7 billion.


Much of the improvement is thanks to better-than-expected tax revenues driven by a rebounding economy, strong consumer spending, and federal relief that allowed unemployed workers to continue paying income taxes. State spending also dropped by about a billion dollars.


It's also worth noting that the projected deficit for 2022-23 does not take into account any potential federal stimulus funds, which could help offset our deficit. Minnesota also has $2.4 billion in budget reserves, which could also be utilized.


With all factors considered, I think we should all be able to acknowledge that tax hikes should not be at the forefront of the budget setting discussion that begins in January. That's a good thing, as I don't believe it is good economic policy for government to take more money from our residents and Main Street business owners who are already struggling to survive during this pandemic.  We must find a way to keep government spending in line with our projected revenues for the next two years while keeping as much money as possible in the hands of private citizens.