Why it matters: Returning to deficit spending, raiding school funding and other risky plays with state dollars should be avoided at all costs.
Volatile state revenues and an uncertain national economy dictate state leaders be cautious with the newly announced $1.5 billion budget surplus.
In what appears to be a continuing reversal of philosophies, Democrats seem willing to be more conservative with the budget surplus than Republicans. We would be the last to suggest the philosophies of political parties, as long as somebody remains fiscally conservative here.
Democrats have proposed using at least some of the surplus to invest in early childhood programs and education that have arguably been underfunded in our brainpower state. And they talk about closing the achievement gap as well. Special education has long been underfunded mostly by the federal government, but that has left school districts with a $700 million gap in funding as required by federal law.
Republicans have proposed a tax cut plan to give $1 billion of the surplus back to taxpayers. That plan calls for permanent cuts to the income tax rate and exempting Social Security taxes that would go to a lot of wealthy folks.
It’s not a conservative idea to use a one-time surplus to fund an ongoing revenue loss like tax cuts.
Sen. Julie Rosen, R-Vernon Center, and chair of the Senate finance committee offers some sage advice: "I would caution the governor, his commissioners, and my fellow legislators to rein in the unnecessary spending," Rosen said in a statement. She noted we must fill the disaster relief account and replenish state budget reserves.
The disaster relief account needs about $30 million and is being proposed as a bipartisan bill. That account was set up to be the state’s contribution to matching federal funds in some cases. Flooding that was worse than expected last year dictates the account be bolstered.
The budget reserve on a $50 billion biennial budget is a little less than 5 percent, a number often debated as too low. The reserve was "borrowed" from last year as part of the session ending budget deal.
The risk of the national economy should add to the caution. The stock market on Wednesday lost all of its gains for the year due to fears of how the COVID-19 virus would impact the world economy. Even before the virus fears, the economy was scheduled to grow at just 1.9 percent per year, 50 percent below Trump administration estimates of 4 percent per year.
Rosen notes there’s room to also clean up existing state spending programs, namely in the Department of Human Services. We agree. The presence of more money shouldn’t preclude the diligence of controlling waste.
We take a conservative approach to spending. Legislators and the governor need to be cautious with the surplus.
This editorial is the opinion of the Mankato Free Press' editorial board.