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Legislators' reactions to state surplus are mixed

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news Brainerd, 56401

Brainerd MN 506 James St. / PO Box 974 56401

Some area lawmakers would like to see part of the state’s projected $876 million surplus used for property tax relief. Others expect there will be little or no cash left after Minnesota’s cash flow account and reserve funds are replenished. They all agreed that Thursday’s projected surplus by state budget officials is a far better situation than the $5 billion deficit they had to wrestle with last year.

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“It’s great news,” Sen. Paul Gazelka, R-Brainerd said, “I think most of it can be attributed to the private sector growing jobs.”

He credited the Legislature and Gov. Mark Dayton with making progress to streamline the permitting process and creating an environment for business that is more predictable, stable and business friendly.

“We were all braced for bad news,” Sen. John Carlson, R-Bemidji, said. “This was very good news.”

“It’s better than a poke in the eye,” Rep. Larry Howes, R-Walker, said.

The rumor mill, according to Rep. John Ward, DFL-Brainerd, was that the deficit could be between $500 million and $1 billion.

“Which would really add a lot of stress to an already stressed out budget,” Ward said. “(A surplus of) $876 million is absolutely fantastic for the citizens of the state of Minnesota.”

Rep. Mike LeMieur, R-Little Falls, said in a statement that he was glad there has been an improvement in Minnesota’s economy but noted that state law requires $255 million will be used to bring the state’s cash flow account back to a total of $350 million and the remaining $621 million will go into the state’s budget reserves.

“Our priorities are still focused on giving the state’s job creators the tools they need to build successful businesses in Minnesota and strengthen the economic climate,” he said in his statement.

If there is any surplus left over, Gazelka would like to use it to tweak the property tax changes that were made in the last legislative session when the homestead credit was replaced with a property tax exclusion.

Howes also mentioned the shock some taxpayers were experiencing when they saw their property tax bills. He would like to see some of the surplus used to help those people who saw their property tax bills go up dramatically. The veteran lawmaker said an example of a home that might have seen an increase in property taxes would be a relatively modest $80,000 home in Walker or the Shingobee Township area that was located near more expensive lake homes.

“I know Cass and Morrison counties got hit the hardest,” Howes said. “Cass County has not raised its levy for four straight years. The tax capacity in Cass is the lowest in the state.”

Two other legislators, Ward and Carlson, said they didn’t think there would be much money left over after the reserve fund and cash flow account were replenished. Carlson said he didn’t expect there would be much money left over but that addressing the unintended consequences of the changes in the property tax system was important.

“Based on what I see right now, I don’t think there will be anything left over,” Carlson said.

The first-term senator said that under the old system cities and counties had quit budgeting for Local Government Aid because they couldn’t count on the state to come through with the money.

Ward said his understanding is that there will be zero dollars left after reserve funds and cash flow accounts are replaced.

“Small business people, farmers especially got hit hard,” he said. “Property taxes have taken an increase. A lot of it is the elimination of market value homestead credit and cuts to Local Government Aid.

“I’m all on board with working in a bipartisan way to help fix the problems created by the last session.”

In a cautionary note, Ward pointed out the the Legislature borrowed $700 million from state schools (for a total of about $4 billion) and $700 million from future revenue in the form of tobacco bonds in order to balance last year’s budget. None of that, he said, is being repaid.

“We haven’t had a lot of reasons to celebrate,” Ward said. “It is good to celebrate but let’s be honest and look at everything.”

MIKE O’ROURKE, associate editor, may be reached at mike.orourke@brainerddispatch.com or 855-5860.

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