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Dear Neighbor,
Greetings from the House. I hope you are enjoying this nice December weather while we can because real winter is bound to arrive soon.
Speaking of good things coming to an end, a string of unprecedented, multi-billion dollar state budget surpluses is giving way to a?potential budget shortfall according to a new economic forecast issued by state officials Wednesday.
The report shows our state's budget is OK for the near term, with a $2.4 billion surplus for the current biennium. However, the report also shows that surplus will be consumed by higher spending already in law over next two years, raising questions over a potential shortfall for the biennium starting in July 2025.
This news underscores the need for balance in St. Paul after Democrats last May raised taxes by $10 billion and increased state spending by 40 percent despite a $17.5 billion state surplus.
As a Star Tribune columnist?wrote, "This gap between the growth of the state economy and the growth of state government spending, as I noted earlier this year, has no precedent in the modern-day budgeting of the Minnesota government that began in 1960. That should have been a signal for prudence."
Unfortunately, "prudence" is not what happened in St. Paul last session. It is quite concerning to think we went from a $17.5 billion surplus to hearing talk of a shortfall in just six months.?An updated February forecast will serve as the official fiscal legislative framework for the 2024 session. It will be interesting to see if and how our bottom line changes between now and then.
According to a recent poll, Minnesotans wanted more tax relief and bigger rebate checks from last year's legislative session. This new economic report should not change the fact tax relief is in order for Minnesotans to lessen the burden we are all suffering with higher prices in today?s economy.?
That said, the fiscal imbalance and concerning long-term outlook for our state also is a call to make smart adjustments to spending. The fact we so rapidly went from a $17.5 billion surplus to a potential shortfall in the next biennium is a clear indicator our state needs more balance in St. Paul.
Sincerely,
Paul
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