Price of government soars due to inflation
Just about everything costs more these days with the rate of inflation running at close to nine percent. Unfortunately for state taxpayers, that includes the price of government at all…
Did Minnesota’s state government have enough money, or should its citizens hand over more of their money in taxes? That was one of the central questions in the last legislative session in Saint Paul.
As I wrote at the time, the numbers show that Minnesota’s politicians actually have a near record amount of cash to spend.
According to the Minnesota Department of Revenue, in 2017 – the most recent year for which we have data – the state government collected $23.9 billion in taxes. In real, inflation adjusted terms, this was more tax revenue than in any other year in history except for 2016, when it collected 0.9% more. The story is much the same in per capita terms. In 2017, state tax revenues were $4,295 for each Minnesotan, the third highest amount in history, down 1.7% from the historic high of 2016.
From these near historic highs, revenues are set to rise even further. In February, Minnesota’s government was forecast to take $1 billion more from the state’s taxpayers in the next two years than it needs to cover its projected spending over that same period.
And this rosy picture improved further last week when the Department of Minnesota Management and Budget reported that revenue was $489 million higher in April than had been projected
The good fiscal news continues
This week, Minnesota Management and Budget (MMB) announced that, in May, the state government collected $148 million more revenue than it had forecast. Individual Income Tax receipts were $12 million above forecast and General Sales Tax were $73 million above.
Of course, there are caveats, and MMB explains what those are. But for the fiscal year that ends this month, the state has now pulled in $722 million more than anticipated. In May, I wrote that The already weak case for hiking taxes on Minnesotans just got weaker. It just got weaker still.
John Phelan is an economist at the Center of the American Experiment.