Investing Minnesota’s budget surplus
On Dec. 3, state economists confirmed what many suspected: Minnesota remains a national leader in economic recovery. In the first week of December, state economists announced a forecasted budget surplus of $1.87 billion, largely due to higher-than-expected sales tax revenue and less spending on health and human services.
The news is good because it means Minnesota will now meet the budgetary reserves required by state statute. Thirty-three percent of the budget surplus ($594 million) will be deposited into the state’s rainy day fund.
In 2014, we passed a law requiring a portion of any budget surplus to be saved in our state’s rainy day fund until it reaches $2.2 billion. With this most recent deposit, our reserve sits at a healthy $1.597 billion. Other states are following suit. A strong budget reserve will help ensure Minnesota will be better positioned in the event of future economic downturns.
The budget surplus is also good news because it means most Minnesotans are employed. The state’s 3.7 percent unemployment rate in October remains the eighth lowest in the nation. Wages are also expected to grow by 4.9 percent in 2016. Standard & Poor’s also recently upgraded Minnesota’s bond rating outlook, in part because of the state’s strong fiscal position and strong economic performance overall. Minnesota's rating was downgraded after the state government shutdown a few years ago.
Finally, the budget surplus gives legislators the opportunity to consider important investments. A high priority should be to invest in Minnesota's transportation infrastructure. This means improving our roads and bridges, investing in our ports and airports, and remembering our transit systems as well. In 2015, Minnesota has 830 structurally deficient bridges. The average age of these bridges is 66 years, well over the typical design life of 50 years. Our state’s aging bridges are just one symptom of a greater problem within Minnesota's aging transportation infrastructure system.
In addition to our aging bridges, we have hundreds of thousands of miles worth of roads and dozens of rail grade separation projects seeking millions in bonding to improve rail safety in communities across the state. In Duluth, the port and airport are also significant parts of our transportation system. Every community can think of a handful of critical transportation projects. Combined, they serve as a compelling argument for investing some of the budget surplus on a transportation funding package.
Last year, when our state announced it had a budget surplus, a myriad of suggestions were brought to the table. The 2015 session saw important investments in early childhood education and home/community based services. This session I expect a large capital investment bill. All of these potential investments are needed and necessary.
However, in 2015 we completely punted on the goal of passing a robust, long-term transportation funding package. With each passing year our infrastructure continues to age, repairs become more expensive and the overall situation becomes worse. The time is now to pass important investments to improve our roads, bridges, ports, airports and transit systems. Minnesota’s economy and quality of life depends on it.Roger Reinert, DFL-Duluth, represents District 7 in the Minnesota Senate.