Legislative Update – Budget Surplus

Dear Neighbor,

Last December, the Office of Minnesota Management and Budget released the state budget forecast for the next two years, showing unexpected and welcome good news of an $876 million surplus (more revenues coming in than expenditures going out). The surplus is primarily due to cost saving results of the final budget passed by the legislature and signed by the governor last summer. The budget surplus, as required by Minnesota statute, will first be used to replenish the state’s cash flow account, similar to a family’s checking account, and then to build up the state’s budget reserve account, similar to a family’s saving account. Once the state’s cash flow and budget reserve accounts are replenished, the school shift, used to balance the state budget last summer, will be repaid.

I would like to take a moment to explain the school shift, since some people have asked for an explanation. The school shift is very similar to paying a portion of your holiday gifts with cash and paying the balance in the following year. For the 2011-12 school year, the school shift is 60/40; meaning 60% of school funding is paid currently and 40% in the next year. The entire amount of school funding is paid to the districts; however, it is split between years. The previous legislature used a 70/30 school shift to balance the state budget. Last summer the legislature and governor recognized the change from a 70/30 to a 60/40 payment plan could cause cash flow problems for some school districts, so the school funding formula was increased by $50 per pupil for the 2011-12 school year and increased by $100 per pupil for the 2012-13 school year to pay for short-term borrowings.

In 2011, I was privileged to chief author legislation, signed into law, to promote literacy by the end of 3rd grade. The legislature also passed a performance-based teacher evaluation system, an early graduation achievement scholarship program, and alternative teacher licensure. The economy is dependant on a well-educated workforce, so continued attention will be focused this session on measures to improve education in Minnesota.

Additional reform initiatives the legislature is working on to improve jobs and Minnesota’s economy include enhancing the Angel Investment Tax Credit to spur entrepreneurship and business growth, phasing out and eliminating the business property tax, lowering energy costs by crediting hydropower in renewable energy goals, and establishing a limited moratorium on state rule making and regulations.

I invite you to call my legislative assistant, Allie at 651.296.9710, to schedule an appointment for us to talk about your concerns.

Representative Pam Myhra