It’s time to make state forecasts match reality
Minnesota lawmakers are enthusiastic about the news that a $1.5 billion surplus awaits them in the coming budget biennium. But there’s reason to be cautious about their optimism. It’s because state budget forecasts are required by state law to factor in inflation when talking about revenues but to leave out inflation when talking about expenses.
When inflation is fully factored in, the $1.5 billion surplus is estimated to be about $382 million, which is better than a poke in the eye with a sharp stick, but a far cry from $1.5 billion.
This rule that inflation estimates can’t be factored in for expenses gives a false rosy glow to any state budget forecast. It seems like a state-sponsored deception designed to make the voters and taxpayers think everything is going fine.
For those who like to compare state finances to a family sitting around the kitchen table, it’s like the family setting its budget and counting up the 3 percent raise Dad got and thinking that’s all gravy, without considering that the cost of food is going up, the cost of gasoline and health insurance is going up, the cost of medicines is going up.
It’s time the state did away with this hokey sleight of hand and let the people of the state know the real state of the state’s finances. We call on legislators to strike a blow for transparency and accuracy by removing these restrictions from state budget forecasts.