by Lisa Demuth
State Representative, District 13A
The Legislature’s top priority for the 2021 session is to set a new state budget for the next two-year cycle before adjourning in late May.
Formal work on this issue is just beginning now that we have received the February economic forecast for our state. That report from Minnesota Management & Budget projects a $1.6 billion surplus for the 2022-23 biennium, a rather pronounced departure from the $1.3 billion shortfall projected in December for the same period – representing nearly a $3 billion reversal.
This turnaround, MMB said is largely linked to federal actions that have emerged since the last full forecast was issued in November. Higher revenue forecast, lower state spending, and an increased surplus for the current fiscal year also are contributing factors.
The one consistent message I have received from constituents in response to this budget news is: “Good. Don’t raise our taxes.”
That said, the governor started the budget-negotiating process earlier this year by proposing a $1.7 billion tax increase and $52.4 billion in state spending. His plan would give Minnesota the nation’s second-highest business tax and third-highest income tax rates.
The governor now is expected to produce a revised budget plan which accounts for the new economic data we received. I hope he rethinks his position on raising the taxes of Minnesota workers at a time we are seeking economic recovery. This is especially unnecessary considering the state’s $1.6 billion surplus.
In the meantime, the House and Senate majorities soon will be coming out with their own respective budget proposals. Our focus should be on providing taxpayers with relief and security as we work toward safely re-opening our state and revitalizing our post-pandemic economy.
Let’s help businesses and families that have been impacted during the pandemic get back on their feet from the financial hardships they’ve experienced. Tax increases are unnecessary, would be detrimental to regrowing our economy and should be set aside during negotiations.
As we build toward overall budget agreement in late May, more immediate action is needed to spare more than 102,000 businesses throughout Minnesota from owing state taxes on forgivable emergency loans recently issued by the federal government.
According to the Tax Foundation, Minnesota is the only state in the Upper Midwest that has yet to exempt forgiven Paycheck Protection Plan loan income from state income taxes. It is unconscionable for the state to skim tax dollars off federal PPP loans, offered as lifelines for businesses to keep employees on the payroll as COVID-19 and related state restrictions stifled their operations.
House Republicans are on board with making this change, the DFL chairman on taxes, has expressed support, the governor said he is open to the idea and Senate Republicans conducted a hearing to discuss the issue. It’s time to get this done and spare our workers from this added headache.
The budget-setting process will be a lengthy one and I look forward to the work in these atypical times. Information will continue to be received to help shape our decisions. For example, as our children return to school, I look forward to learning whether – and/or to what degree – students have experienced setbacks in learning during the last year so we can respond accordingly.
I welcome thoughts and ideas from constituents as we continue working to achieve agreement on a budget before the end of May. The best way to reach me is by emailing email@example.com