Senate budget approach preferred
Posted Online 5/14/01
The Minnesota Senate offers more funds for higher education and K-12 education, and suggests caution over major tax cutting, based on surplus projections that may not materialize in the next two years.
The conference committees meeting this week should follow the Senate’s lead in funding of services and in protecting the financial stability of the state’s budget, while offering some property tax relief and a sales tax rebate.
There is a lot to like in the House budget proposals that follow Governor Jesse Ventura’s lead and significantly reform the property tax by having the state take over K-12 education funding.
The Senate proposal, in contrast, would not have the state completely take over K-12 education funding, but would spend $1.03 billion more for education, transportation and health care than the House. It includes $500 million of additional spending for early childhood and K-12 education needed by growing school districts facing program and staff cuts. The Senate also would increase higher education by $277 million compared to the $165 million in the House budget proposal.
Unlike the House and the Governor, the Senate would rebate one-half of the $856 million surplus for this budget year. The other half would primarily fund transportation projects.
The surpluses of $856 million forecasted for June 30, 2001 and $2.4 billion forecasted for June 30, 2003, however, are based on the economy staying healthy. In light of past revenue forecasts and a sputtering economy, the Senate’s more cautious approach to spending those surpluses may be the wiser course.
From November of last year to this February, the surplus projected for the period ending June 30, 2003 dropped from a little over $3 billion to $2.4 billion. The projected surplus for this fiscal year was reduced from $924 million to $856 million. Since the February forecast, revenues actually collected are down $60 million. This trend suggests a cautious approach.
Critics of the Senate plan argue it does not include real reform of the property tax system. They argue that now, when there are surpluses, is the time to enact real reform, contending that reliance on the property tax for K-12 education needs to be changed.
Proponents of the senate plan say the surplus represents an opportunity to maintain quality education, health care and transportation systems, which have demonstrated a need for more funds. The Senate plan also incorporates property tax relief and a sales tax rebate, but more importantly, it offers financial stability in state government at a time when the state’s economy poses questions about its ability to maintain surpluses.
Editor’s note: This editorial was a product of the ECM Editorial Board.
