There is much talk of the historic surplus now in the hands of Minnesota’s government. And there should be talk, as it represents a figure roughly equivalent to one-third of the total budget of the state. $17.6 billion is a rather noticeable figure, considering the state budget for 2023 is just north of $48 billion. Many questions abound in the media and on the Capitol steps as to how best spend the extra funds, and many hats and hands are out in attempts to put the money into action throughout the state.
The reasons for the surplus are apparently threefold: remaining excess federal pandemic aid, previously-saved surpluses during that period, and estimated future tax revenue at current rates. While excess federal pandemic funds account for much of the contrast, which understandably threw the budget for a loop, Minnesota Management and Budget still lists taxes as the largest source of state revenue. Projected at $66.4 billion in the 2022-2023 biennium, taxes account for $23 billion more than federal grants to the state. The entirety of the rest of the biennium budget amounts to just over $8 billion. While it is clearly not a case of “they overtaxed the public,” the reality remains that taxpayers will be on the hook for how this surplus is ultimately utilized.
Minnesotans are naturally asking questions about how the surplus should be spent. What do we need here that isn’t currently being properly funded? Proposals include rebate checks, increased education funding, social security tax reform (or elimination), housing assistance, universal paid leave programs, and health care. While more can always be done in these essential areas, it appears ample deference is already being given via the current budget. Health and Human Services already receives 44% of the budget, and E12 education receives 21.6%.
These important decisions are currently being mulled at the Capitol. It’s not as if this will be coming up for a referendum on the next ballot like a local school tax increase, giving citizens a choice in the matter. It will be decided by the legislature, as they are tasked to do in the state’s best interest. We are being enticed with all the great ways this money can be spent. What is not being discussed is whether we should be spending it at all.
Like it or not, after the November election we are a oneparty state, with the House, Senate, and governorship all safely in DFL hands. In Minnesota, this leaning is nothing new. We like our liberal reputation, whether or not we know why we do. After all, it’s what Mom and Dad always did. Nor are high taxes unfamiliar to us as a result, in comparison to most other states. Minnesota ranks fifth in the US for highest income tax rate at 9.85%, below Oregon, New Jersey, Hawaii, and California (which comes in at 13.3%).
Meanwhile, property taxes continue to soar in the current market, raising yearly tax costs for homeowners and renters alike. Those taxes are passed down to the individual, regardless of ownership. Rent hikes have become palpable and show no signs of stopping.
Food prices are skyrocketing as well. Two chicken breasts at the grocery store can now commonly cost $10, compared to $6 just two years ago. A dozen eggs for under $5? Doable, but good luck finding them. Nearly everything on a shelf has gone up 20%-40% in a very short period of time. Unfortunately, for most, income has not kept pace. The result is the average family being steadily priced out of a once-affordable lifestyle, for the privilege of trying to live in the area of their choosing with a modicum of modern living standards. There are many reasons for this which can be debated, including recent national supply chain issues and production difficulties, but it now affects everyone all the same.
Admittedly, this is nothing new. Comfort comes and goes, ebbs and flows. Some don’t really notice, as the difficulties facing others pass them by at just the right time, but most do notice. Sometimes, though rare, even the biggest lenders have to take a stiff haircut, depending on the times. But it’s most often the common citizen that absorbs the hit, as they have little power or authority to challenge what is handed down from above. There is, however, one body that doesn’t ever seem to have to cut back, and that body is the state.
Gov. Walz has proposed sending rebate checks to individuals and families in Minnesota, which is commendable on a base level. That said, the amounts being floated are $1,000 per individual taxpayer or $2,000 for households. With approximately 3 million taxpayers in Minnesota, this rings up to a total of around $3-$4 billion returned to the people. Where does the other $14 billion go?
In reality, the surplus claimed by the state is not a given. It is not the government’s money. It is the people’s money. Governments don’t have any money, citizens do, and they grant the government authority to take some of it and use it for the greater benefit of the public. At least that’s what is said on paper. The solution could be very simple, but it is not being treated as such: give it back, and lower taxes going forward.
Many new social/educational programs and government jobs can be created with this money, and they very likely will. Many have the possibility of doing good things. Many also have the possibility of being mismanaged and exploited, as has been shown by the $250 million Covid-relief food fraud scandal that shocked the governor and the Department of Education. Oversight is not the government’s friend, yet there always seems to be a need for another committee to oversee things.
How about they oversee writing checks to give this money back to the individual? Seems a lot cheaper. And who couldn’t use an extra $5,800 of their own money this year? The problem is that they won’t do this unless the people demand it. And even then, they probably won’t.
The legislature is understandably thrilled to have this opportunity to spend more money and do as much good for the state as they can. However, once a new line is added to a government budget, it takes the moving of a mountain to remove it. New programs become existing programs, and new expenditures become annual expenditures. If this is not countered, the result is just a larger state budget going forward, in virtual perpetuity.
Many people have experienced good fiscal years followed by bad fiscal years, and are aware of what that can do to their home finances. Amplify that to the state level. What if there isn’t a surplus next year? Too bad, taxes will have to go up to maintain the programs that were implemented this year.
This doesn’t mean there is no precedent for addressing this type of situation. For example, Oregon, the fourth most-taxed state in the country, has an automatic refund triggered when they are taxed over the state budget. Indiana, Massachusetts, and a handful of other states have similar protective laws. They may not give it all back, but it’s an automatic acknowledgement of responsibility to the people and the taxes they pay. Their refunds are typically triggered for far smaller amounts than Minnesota’s current $17.6 billion windfall. Why don’t we have a similar system in place?
Residents can leave things as they are and continue to write bigger checks each year, but they can also contact their representatives and ask for real answers. Mandates only exist if no one says anything to the contrary. Much good can be done with this surplus, that is true. But there is no surplus. It is extra money belonging to the taxpayer, currently in the hands of the state.
Why not let each household have back their due and let them decide how best to put it to use? Leave it to the individual to put their money to the public good, be it at the local hardware store, car dealership, charity, church, or grocery store. Despite barely even being addressed by those responsible for oversight, the $250 million food fraud debacle has shown us that sometimes it might just be better to give directly to the local food shelf than to trust the government to make such things happen properly on a grand scale. $250 million disappearing into the ether? Imagine what boondoggles can be created with $17.6 billion.
The American Dream is certainly still alive. It is, however, increasingly becoming out of reach for many with the best of intentions, who perhaps didn’t play their hands at the right time, and are now being squeezed. Either way, it stands to reason that Minnesota taxpayers should demand more than $1,000 of their money back from the state “surplus” before it becomes codified into law as “theirs.”