New surplus forecast renews tax cut debate

Published 12:00 am Thursday, March 1, 2001

The state’s much-anticipated revenue forecast was finally released Wednesday, shrinking the surplus and predicting a slow down of the state’s economy.

Thursday, March 01, 2001

The state’s much-anticipated revenue forecast was finally released Wednesday, shrinking the surplus and predicting a slow down of the state’s economy.

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The announcement renewed debate over tax cuts, rebates and spending as the projected surplus fell by about $600 million.

Rep. Dan Dorman, R-Albert Lea, remained upbeat about Minnesota’s economy despite the new forecast.

&uot;I don’t think there’s any surprise following the current blip in the economy,&uot; Dorman said. &uot;But, there’s every reason to be optimistic about the long term. I agree with the governor that this is just a temporary downturn and the economy should rebound quickly.&uot;

Dorman said the current biennium surplus amount has been reduced by about $67 million to $856 million. Dorman said he would still like to see that entire amount returned as tax rebates.

&uot;The average rebate check may be a bit smaller, but we’re still talking about $400 to $500 for the average family,&uot; Dorman said. &uot;That will still help a lot of people pay some bills.&uot;

Many DFLers, like Rep. Henry Kalis, DFL-Walters, had a more cautious tone after the announcement. Kalis said he was concerned that the projection may still be too optimistic.

Kalis said the new projections still show Minnesota’s economy way out in front of the national economy. State forecasters are relying on a drop in oil prices and increased productivity to achieve the new surplus, he said.

&uot;These things are cause for concern, in my judgment,&uot; Kalis said. &uot;This is still a sizable surplus, and I’m worried that the house is too focused on it.&uot;

Kalis said many legislators seem addicted to the idea of tax cuts and rebates because they’re so popular with voters.

&uot;We’re forgetting about the tough policy decisions that need to be made in areas like transportation and health care. We were sent here to tackle the tough problems,&uot; Kalis said.

The new forecast does not look positive for agriculture, Kalis said. It projects a drop in farm productivity of 9 percent this year and 14 percent in 2002.

&uot;I think that sounds very serious, but no one seems to be talking about it. We need to address this as soon as possible,&uot; Kalis said.

The new forecast is more evidence that lawmakers need to take a balanced approach to the budget, agreed Rep. Rob Leighton, DFL-Austin.

&uot;We need to be thinking about one half for investments and the other half for permanent tax cuts. That’s still my philosophy regardless of the size of the surplus,&uot; Leighton said.

If legislators follow the governor’s plan, Leighton said, the budget would dedicate 89 percent of the surplus to tax cuts. That brand of imbalance doesn’t seem to have the support of constituents, he said.

&uot;In four weeks of hearings on the governor’s budget, I’m hearing that Minnesotans want some investment in education, nursing homes and other areas,&uot; Leighton said.

Now that the two parties have a better idea of the overall dollars available, they can set spending targets for the committees, said Leighton. Thus the real work of the legislature begins this month.

Dorman said he’s interested to see how the governor adjusts his budget to the forecast.

&uot;Given the slim spending increases the governor is recommending, it’s likely he’s going to have to adjust on the tax side,&uot; Dorman said.&uot;