Minnesota’s projected budget surplus now stands at $9.25 billion, and the fight to split that pie in the Legislature is going to be epic.
In a supplementary budget released last week, Governor Tim Walz introduced a proposal that would send $2 billion directly to taxpayers: $500 to single filers and $1,000 to joint filers. If passed by the Legislature, those checks could be sent as early as this summer to some 2.7 million Minnesotans, Walz told an editorial writer.
Other priorities that the Star Tribune editorial board has strongly supported are the full replenishment of the Unemployment Insurance (UI) Trust Fund, $2.7 billion; plus about $1 billion in bonuses to an expanded pool of frontline workers who lacked the security of working remotely during the pandemic.
Walz’s overall budget proposal also commits $300 million over three years to local communities for public safety needs, including police recruitment, funds to improve 911 dispatch systems, body cameras or any what local priorities require. The average city would receive about $240,000 in assistance.
There is more, but these are all vital areas that deserve funding.
Republicans, however, see the state surplus — one of the largest in the nation — as an opportunity to offer permanent income tax cuts and a full income tax exemption. of social security. Cutting taxes to the lowest level, as Senate Republicans are proposing, would benefit all workers but could jeopardize this state’s finances for years to come.
The income tax cut would reduce the state’s first-tier bracket from 5.35% to 2.8%. They estimated that this would allow joint filers to earn around $100,000 around $1,000. A filer earning $37,000 would save about $500 per year, or just under $10 per week.
The difference is that these reductions would continue year after year, whether or not the state could afford them.
These final cuts must be weighed against a still uneven pandemic recovery made more tenuous by inflation currently running at around 8% – the highest in 40 years – and a war in Ukraine which could be the harbinger of a larger conflict. The prospects of a new recession have increased.
Not too long ago, this state was mired in projected deficits that stretched out for years until taxes were raised in 2013. Great caution is needed when cutting rates. The state has a responsibility not to knowingly overtax, yes, but it also has a responsibility to ensure the continuity of vital services, such as health care and education, which account for the vast majority of government spending. State. The cuts there have a direct impact on the most vulnerable Minnesotans.
And consider this: Melissa Lam Young, assistant commissioner at Minnesota Management and Budget, confirmed to an editorial writer that $4.1 billion, or nearly half of the total projected surplus, is nonrecurring.
Like Walz, Senate Republicans also support the full restoration of the unemployment fund, but they would limit bonuses for frontline workers to $250 million, citing an agreement reached last year when, it should be noted, the he projected surplus was nowhere near as large as it is today. .
It’s just not justifiable when they’re proposing to hold companies — including some large companies that have done quite well during the pandemic — immune to any increase in unemployment insurance costs. Likewise, the DFL-controlled house would arbitrarily limit unemployment insurance funds to just over $1 billion, the equivalent of the amount given to frontline workers. This appears to be a forced equality that could unnecessarily harm small and medium-sized businesses and their workers.
Arguments about permanent or one-time tax breaks and spending go on forever. They will no more be regulated by this legislature than by the preceding ones.
It would be much wiser to use the remaining months of the session to focus on common ground – and there is plenty of that. Tax relief in this time of rising energy and food prices would be welcome. How about one-time checks and a smaller permanent tax reduction? Reducing the first tier to 2.8% would remove $8.5 billion from state coffers in just three years. It is a massive commitment that would deprive the state of its ability to solve other critical problems, such as public security.
And there’s a lot to do on that front, which costs money. Some 9,000 officers across the state do not have body cameras. Walz said he spent months talking to mayors, police, firefighters and activists across the state. “There is no one-size-fits-all solution,” he told a columnist. “Brooklyn Park needs money for officers. Eagan wants to do more with mental health units. Duluth police need new equipment. St. Louis Park wants to direct all police calls to 911, so that “he can sort out what needs an officer, what needs a mental health response. It’s an experiment worth funding. Republicans want to get into recruiting and retention proposals that could bolster law enforcement across the state.
Picture this: Minnesota ends its legislative session in May with refund checks and a small permanent tax cut, money to improve public safety in all parts of the state, protection for businesses from increases unemployment insurance and the fulfillment of the long-delayed promise to reward front-line workers for their efforts during the pandemic.
This is a result we could all be proud of.