The state Legislature now has a new, slightly less ominous budget shortfall to consider: $5 billion, revised down from $6.2 billion.
Despite the new projection, the same problems loom. Gone are the days of federal stimulus money and a surplus in state reserves. Now is truly the time to kick budget balancing into high gear.
Republicans have yet to announce their budget for the next biennium, but considering they want an all-cuts, âÄúliving within our meansâÄù proposal, a better budget forecast shouldnâÄôt change their plans much.
But, if theyâÄôre still taking suggestions, they shouldnâÄôt shy away from what made this current forecast a little bit sunnier: government funds.
MinnesotaâÄôs economy didnâÄôt suddenly improve. Rather, an increase in capital gains tax revenue and a federal payroll tax reduction are to thank.
This is surely a hard pill for the GOP to swallow. Worse news for them, state economist Tom Stinson asserted tax hikes would be less economically damaging than an all-cuts budget.
Republican leaders emphasize the importance of a stable economy, saying it fosters job creation. This is true, but stability doesnâÄôt just come from allowing wealthy citizens to hold on to their money. Still, Gov. Mark Dayton appeased the majority party and eliminated a proposed temporary surcharge on Minnesotans making more than $500,000.
If Dayton can compromise, Republicans can too. They should stop using talking points from their campaigns and start engaging with reality: They have a new, brighter budget forecast and a governor willing to work with them and compromise. They are the only ones who could hold back a sensible budget solution.