My Thoughts on the Budget Surplus

Dear Neighbors,

I’ve been getting a lot of questions about my priorities for the state’s current $9.25 billion budget surplus and so I really enjoyed reading Lori Sturdevant’s column in the StarTribune on Monday, which helps put things in perspective. Like Lori, I reached out to our nonpartisan House Fiscal Analysis Department and was given this breakdown for the balance of the current two-year budget period ending June 30, 2023, and the following biennium ending June 30, 2025:

FY22-23: $9.253 billion

FY24-25: $6.034 billion

To put these numbers into perspective, the State’s current annual budget is about $52 billion. According to staff, the actual FY24-25 surplus will be over $1 billion less than shown because of inflation which, according to current state law, cannot be reflected in the budget forecasts. We should think of it this way: If inflation were considered, the ongoing annual surplus into the next biennium would be in the neighborhood of $2.5 billion per year that we have available with which to make investments or tax cuts. The rest should be considered “one-time money” that won’t be available in future years.

So, what do I think we should do with this money? First of all, we should stop pretending that inflation doesn’t exist. I am the co-author, with fellow economist Representative Jennifer Schultz, of HF2577, which would require that inflation be included in future budget forecasts.

I would invest the ongoing surplus money on these priorities:

1. Increasing pay in personal care professions including
   1. Personal Care Attendants for people with disabilities
   2. Nursing Home workers
   3. Childcare workers
   4. and other direct care professions serving people in need. These professions are suffering from severe workforce shortages and high turnover rates because, while they require both training and dedication, these positions pay less than flipping burgers at a fast food restaurant. As a result, Minnesotans most in need of their care are going without it far too frequently. Even people with severe disabilities can go months without the personal care assistance that they need and deserve. The shortage of childcare is pulling women from the workforce and contributing to worker shortages throughout the economy. If we expect people to take these jobs we have to value their work enough to pay them what they’re worth. I am a co-author of HF 3100 which would permanently adjust the pay rates for Personal Care Attendants to attract more workers into the profession.
2. Supporting education at all levels. We need to fully fund special education, provide more mental health counselors in our schools and pay our teachers enough to stem the ongoing exodus of teachers from the profession. Half of our new teachers are quitting within the first five years.
3. Limited permanent tax cuts such as increasing the percentage of Social Security income that is exempt from taxation. I am a co-author of HF 3846, which would exempt Social Security income from taxation for couples earning up to $80,000 per year.

I would spend the one-time money on these priorities:

1. A package coupling Front Line Worker pay with the replenishment of the Unemployment Insurance fund.
2. Providing the state match required to tap all the federal infrastructure program funds that are available to us. We will need every federal dollar we can get to complete projects like the Interstate 494 expansion project.
3. Housing programs like Mike Howard’s “Bring It Home Minnesota” rental assistance program (HF40), the Minnesota League of Cities comprehensive housing finance proposal, and a robust housing bonding program. I am a co-author on all of these bills. Of course, it doesn’t matter how much we appropriate to fund affordable housing if cities won’t allow that housing to be built, so my own Legalizing Affordable Housing Act will also be an important part of this equation.
4. Other infrastructure programs such as improving broadband Internet access, improving our electrical grid and upgrading our public facilities.
5. Grants to local public safety agencies to upgrade training and equipment and to incentivize a new generation of first responders to join the public safety professions.
6. One time tax cuts.
7. Add money to our rainy-day fund cushion. When Covid struck two years ago we were briefly looking at a $4 billion budget deficit until Congress stepped in to protect the financial wherewithal states. There’s nothing forcing us to spend this entire budget surplus at once.

I hope this helps clarify my priorities and what I will push for at the Legislature!

Standing with Ukraine

The past few weeks have been full of harrowing images from Ukraine as Russia continues their violent invasion. In what has been a conflict of ever-growing atrocities, my heart goes out to the Ukrainian people, including the 17,000 Ukrainian-Americans who call Minnesota home. 

In a unanimous vote, the House voted to divest Minnesota’s state pension fund from Russia and codify Governor Walz’s Executive Order barring the state from contracting with Russian companies.

Prior to the invasion of Ukraine, the estimated worth of Minnesota's state pension fund investments in Russia was approximately $53 million. The legislation will also sanction Belarus for its complicity in the Russian invasion.

Passing this bill is the right thing to do, and in joining numerous other democracies in a similar action, Minnesota is standing with Ukraine and adding to the international pressure that will hopefully soon lead to peace.

You can read more about this legislation here.

Keep in Touch

Don’t hesitate to reach out if I can provide any assistance. Please follow me on my Facebook page for further updates and invite your friends and family to do so as well. 

Thanks for the honor of representing you at the Capitol. 

Sincerely, 

Steve Elkins
Representative, District 49B
Minnesota House of Representatives