Minnesota's economy: strong by design, not accident
We begin the 2016 legislative session with a budget surplus of $900 million. That's less than predicted in November, but maintains a position of strength going into the session.
We also begin with $1.56 billion in the budget reserves, which protects the state from future economic downturns. Minnesota has enjoyed a budget surplus over the past few years due to fiscal restraint in our budget-making and a progressive tax policy.
During the last biennium, our Legislature focused on rebalancing the state's tax system and improving the state's long-term budget stability. Minnesota now has a structurally balanced budget for the first time in a decade. Minnesota also has a healthy rainy day fund and a mechanism for responsibly saving money in the future. In addition, the gap between what the average Minnesotan pays in income taxes, compared to the wealthiest earners in our state, has been reduced for the first time since the 1990s.
One only need look east across the border at Wisconsin for a stark alternative. While Minnesota is running budget surpluses and is on sound fiscal footing, Wisconsin continues to be in significant deficit. While Minnesota is investing in key priorities, Wisconsin has skipped more than $100 million in debt payments and poverty levels have hit their highest point in 30 years.
Much has been made recently of the difference between the two states. While Wisconsin continues to tout they are "open for business," the numbers unfortunately show otherwise. Last year Minnesota was ranked the No. 1 state for business by CNBC; Wisconsin came in at 15. Even more recently, Minnesota was called the second-strongest state in the nation by Politco, while our neighbors to the east came in at No. 11. Even more striking, according to a 24/7 Wall St. report on best and worst run states, Minnesota was ranked the fifth-best run state; Wisconsin came in at 26.
Let's be clear: Minnesota has room for improvement. I highlight the border battle to demonstrate that, compared to our eastern neighbor and the country in general, Minnesota is doing a lot of things right.
This session will be another opportunity for us to continue down this path of economic and fiscal state health by passing a comprehensive tax bill. That tax bill needs to include a restoration of income tax reciprocity. This benefit to cross-border workers in the Twin Ports was eliminated in 2009 and has made life for those taxpayers needlessly complicated ever since.
Another bill that we must pass is a bonding bill, a big-ticket item that invests in publicly owned infrastructure projects across Minnesota. In Duluth's case, a bonding bill that includes money for major infrastructure projects like updating the city's steam plant, repairing the airport runway and cleaning up the St. Louis River would be significant to the region.
I am also requesting money for several smaller but also important projects. The Lake Superior Zoo is asking for $3.8 million to finally fix the Polar Shores exhibit ruined during the flooding of 2012. Glensheen Mansion needs at least $8 million for critical, and immediately needed, repairs.
Currently, our state has healthy debt capacity. The amount of debt the state has at any time, coupled with the amount of bonds the state could sell, is a fluid number. Minnesota has the capacity to sell bonds for just under $1 billion and the ability to authorize bonds for more than that. All of this means that the state is in good financial position to have a bonding bill around $1 billion.
Lastly, this session will be incomplete without a comprehensive transportation bill. Our state has 12,000 miles of roads, many of which require repairs. The state needs a new and sustainable plan for how we are going to pay for transportation infrastructure moving forward. The Senate and House differs on how best to do that. The Senate favors ongoing and dedicated revenue. This provides the mechanism necessary to pay for current and future repairs. Meanwhile, the House seems to favors redirecting money from the General Fund and one-time cash. The House's plan does not help Minnesota pay for transportation in a long-term sustainable way.
This session will be short, fast-paced and my last. I will work hard for it to also be productive.
Roger Reinert, DFL-Duluth, represents District 7 in the Minnesota Senate.