Analysis: Tax increases remain possible despite budget surplus

December 07, 2018 05:59 PM

If you thought a $1.5 billion budget surplus would result in smooth sailing during the 2019 session of the Minnesota Legislature, think again.

Surpluses often generate as much debate and budget angst as deficits.

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"As a result of this surplus, I think I think we can stop talking about increasing taxes right now," said Republican House Speaker Kurt Daudt, who will soon become a minority leader when a new DFL majority takes over next month.


IN-DEPTH

Minnesota's $1.5 billion dollar surplus is a forecast comprised of current and projected balances over the next two years.  The state's current surplus sits at $720 million.  Below are the current budget surpluses for the states that border Minnesota.


The woman who will replace Daudt as House speaker has a much different view, especially when it comes to a possible gas tax increase.

"Governor-elect Walz definitely ran on that and had a conversation with Minnesotans about that topic and he believes it's a mandate of his election and it's a fair discussion for us to have," Rep. Melissa Hortman, DFL House speaker-designate, said at a news conference on Thursday.

Although voters didn't know the state would have a big budget surplus before the election, the governor-elect said on a recent "listening tour" around the state Minnesotans continued to tell him they want better roads and bridges.

"Minnesotans were very clear throughout this tour that infrastructure and infrastructure investment was a major priority for them," DFL Governor-elect Tim Walz said shortly after learning of the surplus. "Long-term investments are going to have to make that happen."


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Political analysts say it will be a contentious debate at the Capitol.

"Minnesotans are over-taxed," said Republican political analyst Andy Brehm. "That's why we have a surplus."

While Brehm says increasing the gas tax should be a non-starter, a DFL counterpart says the gas tax debate should be separate from the regular state operating budget.

"The gas tax I think is a separate proposal completely," former DFL Party Chairman Mike Erlandson says. "You know Minnesotans drive around on the roads in our state and they complain about them. We gotta do something about it and the best way to do that is look at increasing the gas tax."

While the state of Minnesota is often listed in the top five or top 10 on "high tax" lists, the gas tax is an exception. According to the Minnesota House Research office, the state's gas tax of 28.5 cents per gallon ranks 24th in the nation. Neighboring states Iowa and Wisconsin are both over 30 cents per gallon.

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Tom Hauser

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