Another tax rebate expected

Published 12:00 am Wednesday, November 29, 2000

The Associated Press


Wednesday, November 29, 2000

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ST. PAUL (AP) – Minnesotans are virtually guaranteed another surplus-driven tax rebate.

When state budget officials release the revenue forecast later this week, it is expected to show that Minnesota’s robust economy will pump out another surplus.

The state has banked a $345 million surplus since just July, the beginning of the fiscal year. By law, that money – plus any additional surplus projected for fiscal year 2000 – must go to a tax rebate.

This forecast will be the first one to fall under the automatic rebate provision, which Gov. Jesse Ventura called for shortly after he took office.

The projection for 2000-01 is reserved for the rebate. The other part of the projection, from the 2002-03 fiscal year, will determine the amount available for tax cuts or new spending in the coming legislative session.

While the amounts won’t be available until Thursday, House Taxes Committee Chairman Ron Abrams, R-Minnetonka, said the figure could be as high as $800 million and possibly more.

Senate Taxes Committee Chairman Doug Johnson, DFL-Tower, said only that "it will be large enough to consider another round of tax cuts and new spending."

Abrams said his projection is based on the current surplus and other House research that indicates lower-than-anticipated expenses and continued revenue gains.

That, he said, will add ammunition to House Republicans’ argument that this legislative session should focus on another round of serious tax cuts.

State economist Tom Stinson said the state’s forecasting service is projecting a very strong economy for several years out.

"The U.S. economy has never gone this long without a recession," Stinson said. "The economy is way healthier than it has ever been; plus we have massive technological changes going on. The result is, we’re largely in uncharted territory when it comes to predicting what this economy is going to do. We don’t really have any precedent."

Among other things, the state’s forecasting service is projecting continued productivity gains that would have been unimaginable just a few years ago.

Even if Thursday’s projected surplus surpasses the $800 million mark, as some have speculated, it will be significantly smaller than previous surpluses. Abrams and Stinson agree that tax cuts intended, in part, to reduce revenue flowing to state coffers have caused the smaller surplus.

"The tax cuts have already been factored into our projections," Stinson said. "Without them, we almost certainly would be looking at much higher figures."