At the end of the month, the state's Finance Department will issue the February Budget Forecast, which will project how much revenue the state can expect to receive through various taxes and an estimate of spending based on the 2005-2006 budget. We use the projected revenue in that forecast as the basis for the 2007-2008 state budget.
Over the past couple of weeks, Republicans – including the Governor – have claimed the state has a $3 billion surplus to work with. We don't quite know how they've reached that figure, but they certainly are not using the same math that most of us use.
Here's the real budget situation. We're expected to have approximately $1 billion of one-time money left over from the 2005-2006 budget. The November Budget Forecast also projected a $1.2 billion surplus in the 2007-2008 budget, but that forecast didn't include any inflation for most areas of state spending. It also assumed a budget increase of just over 2 percent for K-12 education for the duration of the budget, easily the biggest portion of the state budget, but also one of the areas in most need of an increase. If you factor in inflation, the surplus pretty much evaporates.
These figures aren't expected to change all that much in the February forecast, so, as you can imagine, there's a great deal of competition for state dollars this year. We also have to be careful with how we use the one-time money left over from the last budget cycle or we could find ourselves facing another budget deficit down the road.
The 'no tax' policy of the last four years is a big reason why property taxes increased by $1.5 billion during the previous four years and why fees increased by another $750 million. It's also why class sizes have increased in our schools, college tuition has skyrocketed, health care costs continue to go up, and the condition of our roads and highways gets worse every year.
The people of Minnesota are looking for a different approach this year, particularly when it comes to funding for our children's education, access to affordable health care and relief from property tax hikes.
Our intention in the House is to fund these proposals within the current budget constraints – not with tax increases. However, we are all reasonable enough to understand that if funding is not available to cover the things Minnesotans value, we need to be open to a broad discussion about how to pay for them. This discussion will be transparent and inclusive, not hidden in gimmicks and accounting shifts. I believe Minnesotans want a return to good government and an open fiscal policy.