ST. PAUL - State Representative Joe Schomacker (R-Luverne) said good and bad can be found in Minnesota’s latest economic update.
Our state’s fiscal experts are projecting that Minnesota will see a $3.7 billion budget surplus for the remainder of the current budget term. But in the next budget cycle a $1.5 billion budget deficit is expected.
“The economy is stronger than what we were told it would be back in December,” Schomacker said. “This is good news as people are still working and buying things, and businesses are still producing. But during our forecast briefing a lot of caution was expressed, because in a few months lawmakers are going to be dealing with deficits again.”
Higher than expected corporate profits and higher tax receipts have significantly raised the corporate tax revenue forecast, which helped improve the projections in both budget cycles. However, Schomacker noted that the state can’t continue to rely on the corporate income tax to supplement or pay down any future deficits.
Schomacker expects the legislative debate will soon begin that decides if the surplus gets spent or used to help ease the upcoming deficit.
“Short of cutting spending that was approved last year because we can’t afford it, using the current surplus to eliminate the projected deficit would be the fiscally responsible thing to do,” Schomacker said.
Schomacker said the goal of this session should now be to ensure the state is fiscally solid, because right now it isn’t there.
“We hope the economic situation continues to be strong, and we don’t need extra policies or spending that are going to put that into question,” Schomacker concluded.