Senate Report by Dan Sparks

On Thursday, Minnesota Management and Budget (MMB) announced the state’s expected budgetary balance increased $181 million since the November forecast, leaving Minnesota with a projected positive budget balance of $1.513 billion for the FY 2020-21 biennium. While a positive budget balance is certainly welcome, there is economic uncertainty down the road.

The budget forecast is good news, but it is not a long-term economic bump — it’s more like a one-time bonus. Much of this balance is one-time money, and according to MMB there are future projections of budget deficits coming. We must be careful in whatever we do this session, and we must be especially careful in considering any ongoing spending. We’ve worked hard to get the state on sound financial footing and must not make short-sighted choices that could create structural problems in the future.

This year’s focus remains in passing a strong bonding bill. With well over $5 billion in bonding requests from across the state, we should try to pass a bill that addresses as much of the backlog as possible. Gov. Walz and my colleagues in the House have suggested using some of this one-time money for a final bonding bill, and I think that’s an option we should strongly consider. Many of these are shovel-ready projects that would create good jobs and be long-term tools for economic development. For these reasons, they are perfect for one-time investment.

Despite the positive budget balance, there is a strong note of a caution from MMB as well. With the potential for an economic slowdown, and growing issues with the effects of the coronavirus in global markets, there could be some major repercussions for Minnesota’s economy. We must be prepared for any downturn.

That’s why I support putting some of this funding into our state’s rainy-day fund, formally known as the budget reserve. Though some money is already going into the reserve, we can be even better prepared for any downturn by strengthening this fund. Without a strong budget reserve, a downturn could force us to make cuts that would hurt our most vulnerable citizens, funding for our schools and addressing infrastructure needs.

We must exercise great care in committing to any ongoing spending. With the forecast’s cautions about a potential economic downturn and the cost of inflation, it would be highly irresponsible to use this one-time surplus on spending we know we cannot afford. Instead, we should strike a balance between strategic one-time investment and enhancing Minnesota’s budget reserve.

Dan Sparks represents District 27, which includes all or portions of Dodge, Faribault, Freeborn, Mower, and Steele counties in the southeastern part of the state.