Minnesota’s government is forecast to take more money than it thought it needed: it should give it back

Minnesota Management and Budget (MMB) released its new budget forecast today, projecting a $7.746 billion projected surplus for Fiscal Year 2022-23. This is the largest surplus in state history. It also doesn’t include unappropriated federal American Rescue Plan funding or COVID-19 response money.

MPR News has a story titled ‘State has $7.7 billion surplus; line forms for share of money‘ (don’t let anyone tell you that there is anything especially noble about politics) and it is true that the question of what should be done with this forecast surplus will dominate state politics in the coming months.

Quite obviously, if the state government is forecast to take from its citizens more money than it thought it needed, it should give that excess back to them in the form of a tax cut.

Beyond that, the situation really hasn’t changed since we argued successfully against proposed tax hikes at the start of the year. First, Minnesotans are already some of the highest taxed people in the United States. Second, high taxes depress economic growth. And, third, in total and per person, and in real terms, Minnesota’s state government has never spent more money than it is spending right now.

Our polling shows that when asked how the legislature should use this projected budget surplus, Minnesotans prefer tax cuts and debt retirement to new spending by a two-to-one margin. Minnesota’s politicians were awash with cash before this forecast surplus. They can easily afford to give it back to the people.