Others’ Opinion: Legislature should resist surplus spending

Published 9:35 am Thursday, May 15, 2014

Spending down Minnesota’s projected $1.2 billion budget surplus comes with some serious risks.

But calls for restraint are a rarity in the halls of the Capitol, at least among the party in power. As the 2014 session enters its final days, lawmakers should be concerned about spending that will make government bigger and more expensive to maintain. They don’t seem to be.

As the May 19 deadline approaches, passage of a public works bonding bill, lawmakers’ key task in even-year sessions, plus a second tax-cut measure and an appropriations package, are included on “must-do” lists, the Pioneer Press’ Bill Salisbury reports.

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When it comes to bonding, our approach is cautious. Even with near-record-low interest rates mitigating some of the financial pressure, bonding is borrowing — money that taxpayers pay back in subsequent years, with interest. It takes a three-fifths super-majority to pass such a measure in each chamber, which means that if all DFLers vote for a bonding bill, they still need at least two Republicans in the Senate and eight in the House to agree to the projects.

When it comes to more spending on ongoing programs, concerns compound. Spending now sets us on a path for more spending later. One-time investments? Maybe. Drawing on the surplus to fund continuing government programs, however — adding to the spending base — is unsustainable.

The projected budget surplus was welcome news when it was announced in February as a sign of the state’s economic recovery.

But the April revenue review released Monday by Minnesota Management and Budget shows state revenue down $12 million, or 0.7 percent, from projections.

For fiscal year 2014, year-to-date receipts are now $15.3 billion, $78 million less than forecast.

Are such results an indicator of a slowing economic recovery? MMB warns that monthly revenue variances should be interpreted with caution. Swings may be caused by variations in the rate at which receipts are received and refunds are issued, the department says.

Even so, holding the line on new spending just makes sense.

We’ve warned here repeatedly about the cushion of a surplus, about the comfort it gives lawmakers who find it tempting to give up the discipline that tighter times require.

Lawmakers in 2013 raised taxes by $2.1 billion to fund new spending. With campaign literature in mind, they gave some back in tax cuts and may give back more. As we’ve observed here, making tax relief a priority enhances the possibility of some fiscal discipline.

Spending decisions also should consider the reckoning ahead with a sweeping demographic shift as the baby-boom generation ages and its demand for services strains government resources. Restraint now will give us more room later to maneuver as times and priorities change.