Minnesota’s Economic News — W/E 9/24/21
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The State of Minnesota’s revenue in July fell “well below government forecasts”, continuing a trend that has gone on for several months. Governor Dayton naturally focused on the extremely modest tax cuts that the legislature has just enacted:
Dayton said the new numbers — revenue was 6.4 percent lower than expected in July — concerned him because of the “excessive” tax cuts passed by the GOP-controlled Legislature that “left us without much of a margin for error.”
But the tax cuts amounted to only $650 million over the next two years, just 1.4% of a $45.5 billion budget. Republicans pointed out that their budget included far more increased spending than tax cuts:
Susan Closmore, a spokeswoman for House Republicans, shot back that the budget balancing problem was on the spending and not the tax side.
For every dollar in tax relief provided, spending has increased by $10, she said.
Unfortunately, that is true. It’s nothing to be proud of. The Republican legislature should have cut spending, not increased it by over 9%. If Minnesota kept its spending in check, not only would it not have to worry about budget shortfalls, it would be able to enact the significant cuts to personal and corporate income taxes that would help get the state’s economy moving again.