Now is not the time for reckless spending
If you get paid on Friday and know your mortgage is due on Monday, do you spend every dime over the weekend and assume the problem will work itself out next week?
Of course not. And the Legislature certainly shouldn’t operate that way, either – but it is. The state currently has a modest $329 million budget surplus, and most of the legislative session has focused on how to spend that money. The Governor’s budget prudently leaves $261 on the bottom line, maintains the state’s direct deposit to the savings account, and is very limited on any long-term spending priorities.
In contrast, the Senate Republicans’ budget plans leave just $36 million in the state’s bank account, disregards the automatic savings mechanism for the future, and sets into place a series of long-term spending obligations that are certain to cause budget deficits.
What’s most concerning is that the Republican plan completely ignores many bills coming due in the very near future. They are intent on spending the surplus and then some, and refusing to have a conversation about serious obligations that will be facing the state as soon as 12 months from now.
The most pressing costs are related to health care: nearly $2 billion in revenue that helps fund MinnesotaCare and Medical Assistance will disappear by 2022 as a result of unanticipated federal funding cuts and the expiration of Minnesota’s 2% tax on providers. Medical Assistance insures the low-income and vulnerable in our state, and MinnesotaCare is a proven, affordable insurance option for working adults. Lawmakers will need to find a way to extend affordable health care options to the hundreds of thousands of Minnesotans served by these programs, otherwise every resident will carry the cost through higher premiums and a dismantled health care system.
Another looming challenge is related to education. Minnesota schools face a $700 million funding gap between what they spend on special education and the funding they receive from the federal and state governments. At the very least, Minnesota must whittle away at the state’s portion of that cross subsidy, which is about $288 million annually. Failing to do so will only compound the budget pressures already facing many school districts across the state.
One of the largest future costs is linked to last year’s massive tax bill, which will deplete $790 million from the state’s budget in 2020-2021, and nearly $5.1 billion by 2027. The merits of that bill can be debated, but the fact that it will permanently strain the state’s budget cannot be denied. There are real long-term costs that simply were not planned for when the bill was passed last year.
All of these items highlight the need to be conservative with spending during the final days of this legislative session. Governor Dayton and Senate DFLers have worked very hard to rebuild the state’s finances and will be fighting to protect that balance as final agreements on tax and spending bills are reached in the next several days.