By Rep. Paul Anderson
Progress is being made on opening up the state’s economy as we continue working though the new normal brought on by COVID-19.
Some would say the progress isn’t fast enough, and last Friday’s announcement by Gov. Tim Walz left many folks disappointed. In his latest update, the governor focused on the outdoors being opened up again for Minnesota residents as they would be allowed to engage in a range of activities such as golfing, boating, fishing, hunting and hiking.
Among the businesses that the executive order allows to re-open are bait shops for live bait, outdoor shooting ranges and game farms, golf courses and driving ranges, as well as those dealing with boating and off-highway vehicle services.
With advance notice that this order was dealing with outdoor recreation, it was my hope that manufacturing facilities that make the things folks use while recreating would also be opened back up for business. If you have a 10,000 square-foot building and only 11 people work there, keeping enough distance between workers would be relatively easy to accomplish. Any business that can put forth a plan to resume operations while still adhering to strict social distancing should be allowed to.
I have submitted several such plans to the governor’s office, with the assurance that they would be reviewed. Hopefully, in the upcoming days, there will be additional announcements of more businesses being allowed to resume operations.
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One has to wonder where all the money from Washington, D.C. is coming from. A two-trillion dollar package was recently approved, with the promise of more aid in the near future. One such bill authored by a member of the Minnesota congressional delegation was introduced over the weekend, and it calls for a moratorium for anybody paying rent or paying their home mortgage for 12 months. I ask if someone in our nation’s capital has any idea what a program like that would cost? It would be mind-boggling!
There are negotiations at the state level to cover rents by tenants for the next several months, and that cost is estimated to be around $100 million. That is for rent obligations only, and not mortgages.
When some of these huge spending bills are passed in Washington, do we ever hear about what spending is being cut so we can afford some new program? At least at the state level, our budget must be balanced. So, to cover the cost of something new, one of two things must happen. Either revenue must be raised to cover the new expense (meaning a tax increase), or spending must be shifted or reduced somewhere else to offset the new spending.
With the economy being so dramatically affected by COVID-19, it’s a certainty that revenue coming into the state in the foreseeable future will be reduced. Instead of talking about a budget surplus, which we were doing as recently as six weeks ago, we are now contemplating a pretty severe budget deficit. Some serious decisions will need to be made on just how the budget will be balanced. I recall during my first term back in 2009, we were facing a $6 billion shortfall. That’s when strategies like the education shift were used, and we made it through those difficult days.
We don’t know how large the deficit is going to be. And we do have the reserve fund and the rainy day account to fall back on. An updated financial forecast will be done next month, but until the restrictions on business are relaxed, it will be difficult to predict just how long it will take for the economy to recover.
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