More tax dollars than expected — the product of economic gains and, we argue, too much taxing — continue to accumulate in state coffers. We’ll know more next week, when Minnesota’s next budget and economic forecast is released.

The results likely will spark new skirmishes in the battle over how to spend the surplus. Our position is consistent: restraint, at the very least.

Rolling back the recent tax increases would be better.

In any case, we’ve observed that using one-time surplus dollars to fund ongoing government programs is like using a windfall for a new cable-TV plan with hundreds more channels that will amount to a bigger bill month after month. Better to fix the roof. In the state’s case, why not the roads?

It makes good sense to do so, Rep. Alice Hausman, ranking Democrat on the House Capital Investment Committee, told us.

Based on a House budget reserve and cash-flow estimate, and after accounting for the funding shifts prescribed by law, the St. Paul lawmaker said the state still will have a projected balance of nearly a billion dollars.

“We know that transportation infrastructure is essential to the economic health and competitiveness of the state,” Hausman told us, “so it’s a responsible way of using what could be one-time money.”

Further, use of such funds for transportation infrastructure “doesn’t add to the budget burden,” she maintains. “In fact, it takes off a huge burden in the future, should we have an economic downturn.”

The problems are evident, and we need only look east from downtown St. Paul to see one of them, the Third Street bridge connecting Kellogg Boulevard to the East Side. Its outer lanes are out of service after discovery of a design flaw that dates back to its construction in the 1970s. Reports have listed its replacement cost at $40 million.

We’re not alone. St. Paul Mayor Chris Coleman has met with city leaders from across the state in an effort to advocate for more funding for road repair.

“We’ve never seen as many bills introduced for specific transportation projects” as in the last couple of years, Hausman told us. “That tells me that people all over the state are feeling the stress.”

While wear-and-tear mounts, other funding options apparently are out of the running.

“I absolutely do not believe we’re going to raise either the gas tax or the sales tax” this election year, Hausman said.

There’s also misunderstanding about “the limits of the bonding bill,” which Hausman maintains should be reserved for traditional projects ranging from construction and maintenance needs at the state’s higher education institutions to wastewater infrastructure.

“Thinking that the bonding bill is going to solve our transportation problems misunderstands both the pressure on traditional bonding and the pressure that we’re feeling in transportation,” she said.

House Speaker Kurt Daudt told us he expects the projected billion-dollar surplus will grow slightly in the months before the session begins in March. With the cushion, “we do have some flexibility,” he said, to talk about infrastructure and funding it, a Republican priority, along with tax relief.

In addition, lawmakers approach the session without shutdown pressures or budget deadlines. If they can’t agree, “anything we leave unspent will simply sit on the bottom line,” Daudt said.

When it comes to timing, we posed an idea to Hausman and other key observers: Why not set the dollars aside to spend later, reasoning that — in the event of an economic downturn — construction work could be had for a better price and projects would provide jobs for those who need them.

“The timing would confuse Minnesotans,” Hausman told us, “because they are desperate for these projects.”

Peter Nelson of the Center of the American Experiment also has some reservations: A larger budget reserve should help smooth out the surplus-deficit cycles the state has experienced. It should help avoid the need for the education shifts and other budget gimmicks used in the past to help balance the budget.

As for our save-now-spend-later approach, it’s not a good idea, he said, “to think that all of a sudden we should be expanding our spending” when a cycle turns down.

If lawmakers do spend the surplus, it should be “on something where you get a high value, without creating an obligation” that will require continuous funding when you hit the next downturn, University of St. Thomas economics professor John Spry told us.

Lawmakers risk just such a scenario as they consider universal pre-K, Spry warns, noting that it amounts to a “new commitment by the state to spend indefinitely.”

Surplus dollars for transportation don’t have those long-term strings attached.

If they do choose to spend, the opportunity to address statewide needs with one-time dollars that produce lasting benefits could be compelling for lawmakers. The bottom line for Hausman: “You could do a lot with that cash on the bottom line.”

 

— St. Paul Pioneer Press, Nov. 21