Use rainy day fund, then look for ways to trim fat
It was widely assumed that the COVID-19 pandemic and the measures being taken to contain it would impact Minnesota’s economy. Just how much was announced Tuesday in the latest financial projection from the Minnesota Budget and Management office.
In its February projection, the office projected a state budget surplus of $1.5 billion at the end of the current budget biennium. On Tuesday, the forecast was for a deficit of $2.43 billion, a swing of nearly $4 billion.
How big is that deficit? It’s bigger than the state’s $2.3 billion fund reserve that has been built up over the years, the rainy day fund intended to help the state through lean times.
The difference is a result of the shutdown and layoffs over the past couple months — people who aren’t working aren’t paying income taxes. People who aren’t shopping at businesses that aren’t open aren’t paying sales taxes. On top of that, state spending on emergency relief programs has risen.
So, what should the state do to deal with this fiscal crisis?
Look immediately for ways to trim the state budget. There is no doubt that the state overspends, because it is involved in too many aspects of people’s lives. When people have to do more for themselves, they must and they can.
The state should not raise taxes. They are too high already.
The state (Gov. Tim Walz) also needs to bite the bullet at some point — soon! — and let businesses reopen and let people get back to work.