Use Caution When Dealing with Minnesota's Budget Surplus
St. Paul, Minnesota - February 28, 2014 - Minnesota policymakers can make the best use of the state’s projected $1.2 billion surplus by investing in opportunities for all Minnesotans to share in our economic success, building our budget reserves, and continuing efforts for a fair tax system, according to the Minnesota Budget Project.
“The surplus is welcome news, and policymakers should act cautiously to make sure every cent counts,” Minnesota Budget Project Director Nan Madden said.
Madden cautioned against drastic tax cuts. “A surplus is a sign that a state has more funds than anticipated, not necessarily more than it needs. If we go too far in cutting taxes, we could return to the roller-coaster years of deficits and severe cuts to critical services. Large tax cuts would threaten the state’s ability to sustainably fund our priorities.”
Minnesota’s stronger financial situation means the state should continue efforts for a fairer tax system this session by strengthening the Working Family Credit.
“Policymakers should also take this opportunity to build budget reserves to a responsible level so the state is better positioned to weather future economic downturns,” Madden said.