Legislative Actions on the Projected Surplus

The 2014 Legislative session set out to achieve a balanced distribution of the $1.2 billion surplus projected by the Economic and Budget Forecast and a review of the final accounting reveals that we did just that. According to the 2014 Legislative Summary, new laws included tax relief, local aids and credit, increased funding for K-12 and higher education as well as funding for transportation projects, health and human services, economic development, and capital projects.  Tax relief is a particular highlight, as reported in a June 30, 2014, article published in Agweek. The article said that when the State

“eliminated the market value homestead credit in 2011, it raised property taxes on rural homeowners eight times higher than in the metro area and shifted a $50 million property tax hike onto farmers. When you factor in a 26 percent property value increase, farmland saw an increase of about $65 million.Because of the great importance of agriculture to Minnesota’s economic health, we knew farmers needed property tax relief right away.That’s why the legislature enhanced the market value credit for homesteaded farms, providing immediate property tax relief to more than 90,000 family farmers and permanent tax relief into the future.”

Another highlight is the setting aside of $150 million in the State Budget Reserve. In addition, the legislation that was signed into law also included a provision that would provide for contributions to the Reserve anytime there is a surplus in the future. The last time money was added to the Reserve was in 2001. According to Minnesota Management & Budget Commissioner Jim Schowalter:

“This action is a substantial step towards additional budget stability and prudent financial management for the state. Increasing the budget reserve helps the state manage economic risk and is viewed positively by the state’s bond rating agencies.”

In a recent speech, Governor Mark Dayton praised the Minnesota Legislature for responsible fiscal management as Minnesota “turned a $6.2 billion deficit into a surplus, repaid all the $2.8 billion previously borrowed from our schools, made important new investments in education and job creation, and increased the reserve to its highest level in history.”

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