The headlines proclaim a massive surplus in Minnesota. Over $9 billion. The largest in state history. Conversation abounds about what should we buy? How large can tax cuts be? How much can we increase spending for education, childcare, homeless programs, mental health services and clean water?

Certainly all of those conversations are important as the Legislature and the governor debate priorities, colored by political debate in the face of a looming election where all 201 House and Senate seats and the governor are on the ballot.

My hope is that level heads prevail and decisions will be made as though no election were on the horizon. That discussion must first begin with how much money will there really be?

That $9 billion number is well-intended but comes from a whole series of estimates, each subject to a lot of error. Not dishonesty or mistakes, simply flawed human assumptions. 

When the forecast was being determined, there was no war in Ukraine. Oil was 30% lower per barrel than now. Gas prices were a dollar less. Record-level inflation is rolling through the economy in a way not anticipated. We are still besieged by severe workforce challenges, brought on by COVID and some generous federal unemployment decisions. 

In addition, Minnesota has enjoyed an influx of $73 billion from the federal government’s COVID stimulus and response packages. Virtually everyone in Minnesota has gotten some extra money from that. But that money comes, and then it is gone. As it rolled through the state economy, much of it became taxable in terms of wages, sales tax and company profits. As one considers all that, clearly much of the surplus has come from this Federal influx. It is difficult to measure, but certainly $3 billion or $4 billion worth of the surplus is because of this one-time federal windfall.

When one considers the disruptive effects of inflation, the Ukrainian war, gas prices and inadequate staffing for many sectors, it is easy to imagine that those elements will ultimately affect the state by up to half of the presumptive surplus.

On top of that, we have a $2.7 billion deficit in our unemployment fund. Those employers were gracious during the COVID fight to allow their staffs to not work if they felt at risk for their health. The fund the businesses paid into was overspent so the feds lent us over $1 billion, which has to be repaid. Every cent of that $2.3 billion went to unemployed workers, as a sort of advance payment from our companies and businesses. It is only right that they get paid back. Most of those businesses are not corporate behemoths but are mom-and-pop hardware stores, Main Street shops, local clinics and the like. They, like all of us, have been ravaged by the COVID crisis and they simply don’t have the means to pay twice for their employees.

What that means, in my view, is that we have a pretty small surplus. Perhaps only a couple of billion. A couple of billion is not nothing, but that does mean that we need to be prudent for all of our sake.

When a teenager gets a thousand dollar gift from his or her grandma, they can’t wait to spend it. We can’t be like that.

So to me, the question is, what do we really need now?

As I review the state and its challenges, I conclude that protecting those who cannot help themselves is the greatest need.

The greatest crisis is in assuring that our seniors and persons with disabilities are cared for. The entire industry is on the verge of collapse because the nursing homes and group homes cannot find staff to work there. Most are not accepting new frail elderly seniors and persons with disabilities. Many are simply closing outright. Simply put: where is grandma or a disabled person with profound needs supposed to go? There is nowhere in many areas of the state. It has become a crisis beyond what anybody would have expected. I have proposed spending $1.322 billion of our limited surplus to address this problem.

It is easy to spend $9 billion. It is much harder to be prudent.

We are all in this together.

Sen. Jim Abeler (R-Anoka) represents Senate District 35, which includes Anoka, along with parts of Ramsey, Andover and Coon Rapids.

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