Minnesota's strengthening economy and previous budget savings leave the state with a projected surplus of $876 million, but the flash of good news comes with warnings that the respite could be brief.
News of the surplus Thursday morning stunned legislators who had been bracing for a potentially deep deficit and another brutal budget showdown come January.
The problem -- it isn't real. And as is its wont to do, the local news gathering organization buries the lede:
A significant chunk of the savings that created the surplus came from the administration's health care retooling and Dayton's embrace of President Obama's health care overhaul, which Republicans vehemently oppose.
In other words, one part of government is subsidizing another.
So what's the upshot of all this? A few thoughts:
- Don't expect a tax refund or reduction in rates from the state. It's not gonna happen.
- Although Gov. Dayton indicated that he might go a little more sotto voce on the class warfare, that won't last.
- There's still really no money for a new Vikings stadium.
- The structural problems remain. The state still spends too much money and now that a temporary windfall has come into the system, a lot of hands will come out.
And the other part of the equation? Well. . .
Thursday's surplus projection was accompanied by a less welcome prediction: A $1.3 billion deficit for 2014-15, and a greater than normal chance of recession in 2012.
I don't like to be a bear, but there are a lot of reasons to be one right now.
5 comments:
As opposed to being a Bears fan, of course. There's no excuse for that!
*looks over shoulder towards California*
I agree. I'll eat my hat if that surplus turns out to be real at the end of FY2013. My advice on hearing of the surplus was to put it in the bank and not touch it until we're sure it's for real.
My advice on hearing of the surplus was to put it in the bank and not touch it until we're sure it's for real.
Prudent advice, Jeff.
The mentality that there is a surplus because is like saying that you have $100 in the bank, but completely ignoring the checks that you have written for $500 that haven't yet been cashed. That statement may say that there is money, but the reality is...
Well, of course, it's always a good idea to be a Bears fan. That said, it would do my heart good to see the surplus be real, and be applied to paying down state debt. It's what all smart people do.
Both rooting for Da Bears and paying down debt, of course. To appease and/or confuse the Packer and Viqueen fans, I wore a shirt today with a Viking in green and gold.
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