REP. KIEL: MINNESOTA’S BUDGET OUTLOOK CONTINUES TO IMPROVE, TAX INCREASES UNNECESSARY
St. Paul – Last week Minnesotans received more good news about the state budget and our economy. For the fourth consecutive budget cycle, we have a surplus, and state economists noted that, if left alone, the current operating budget would yield a surplus in the out-years.
As our state budget improves, so does our economy. Unemployment has dropped to 5.5 percent, far below the national average, and in the last year alone, 55,000 jobs were created and 61,000 new businesses were registered.
This good news raises the question: Why the need for a historic increase in taxes?
Governor Dayton has proposed to increase taxes by $3.7 billion tax in order to fix a projected $627 million deficit for 2014-15. What’s more, he proposes to increase spending by $2.5 billion—at this rate, our government would grow 153 percent more than the growth of the economy.
Testimony in committee from state experts and the public has made it clear that this tax plan would hit everyone: every household, every business, every city and every county. Even teenagers who mow lawns and babysit would be targeted under this proposal.
It has been particularly difficult to hear from small business owners who will have to close their doors or cut jobs because of the newly proposed business-to-business taxes, which would require companies to pay more in taxes to the state than they make in profit. One individual said to a group of us, “I can't believe my own state is going to take us out of business.”
When confronted with an upcoming deficit, we must weigh the costs and benefits of any budget proposal. When I took office in 2011, we faced a historic $5 billion deficit, government spending that was set to grow at an exponential rate, and a high 7 percent unemployment rate. We had to make tough decisions, and not all of them were easy or popular, but today we see a very different Minnesota.
Over the last two years, the historic deficit has been turned into a combined $2.8 billion surplus; we paid off the entire 2011 K-12 funding shift—and more; we have replenished our reserve accounts; and we made investments in the private economy—all without raising taxes.
Now, the economy is slowly but surely recovering and beginning to remedy itself. Yes, we must handle the projected $627 million deficit for 2014-15, but we must also understand that the current operating budget would yield a $782 million surplus for 2016-17, if left to its own devices without tax increases or government interference.
We must weigh the consequences of the governor’s proposed multi-billion dollar tax and spending increases against the effects it will have on our slow but steady economic recovery. It is my hope that, after last week’s positive news, the governor will reconsider his tax plan in favor of a budget that lives-within-its-means and allows Minnesotans to keep more of their money and keep Minnesota's economy moving forward.