Good Question: How Did Minnesota Get A Budget Surplus?

MINNEAPOLIS (WCCO) -- On Tuesday, the state's Management and Budget office released its February forecast. Minnesota has a $1.6 billion budget surplus. That's higher than expected because state economists think tax revenues will grow in the next two years.

That had Joan from St. Paul wondering: How did we get a surplus?

Both Minnesota Republican and Democratic leaders agree being in the black on a state budget is better than the alternative. Minnesota has had four years of budget surpluses, which followed five-and-a-half years of budget deficits.

"It's good news," said Senate Majority Leader Paul Gazelka (R-Nisswa). "It makes it easier to balance the budget."

A surplus is a projection of how much tax revenue the state thinks it will bring in over the next two years compared to what it needs for state programs.

"Right now, they're just a snapshot in time," said Craig Waldron, a lecturer in local government at Hamline University. "That's why you have to be really careful. What's the Trump administration going to do, what's going to happen at the national level, what's going to happen in Minnesota."

The reasons behind the surplus differ depending partly on who is asked. Governor Dayton credits some of the string of surpluses to "our sound fiscal management." Some Republicans believe it's partly due to state taxes being too high.

"Remember a surplus is we've collected more money than we need from Minnesotans," said House Speaker Kurt Daudt (R-Crown). "We think we should give some of that back."

Experts says much of positive budget news is due to overall good health of the economy. More jobs means more people are paying more in taxes.

Former state economist Tom Stinson also points out Governor Dayton and Republican leaders couldn't agree on a budget last spring, so they didn't spend that money. Some of that money carried over.

"They're not required to spend it," said Waldron. "It can go into new programs, it can go into tax reduction and there's discussion of putting it into a sock or classic rainy day fund."

On Tuesday, Governor Mark Dayton urged caution for legislators and said he doesn't want the money to be spent because of uncertainty in Washington. Republicans have suggested, but not yet proposed, some kind of tax cut and a transportation package.

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