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Minnesota House DFL committee resolution would add $1.2 billion to general fund budget

(The Center Square) – Targets for the House’s  $7.36 billion general fund budget for fiscal years 2022 and 2023 could be raised under a budget resolution the House Ways and Means Committee adopted Tuesday.

The committee approved the resolution on a party-line vote.

Committee Chair Rep. Rena Moran, DFL-St. Paul, said equity is a fundamental principle of the resolution, which addresses the state’s budget surplus.

“We now have an historic opportunity to catch up and keep up with the needs of Minnesotans,” Moran said in state coverage. “Whether that be through improved funding for our schools, increased services for our most vulnerable citizens, larger investments in preserving our natural resources and infrastructure, our targeted tax relief for families and businesses who are still recovering from the pandemic. The 2022 budget resolution is the road map we would use to tackle all of those things.”

The plan would add nearly $1.65 billion for HF3669’s tax aids and credits, $1.16 billion for education, $1 billion for frontline worker pay, $700 million for health and human services and $200 million for debt service on a capital investment bill, covering a $2.05 billion bonding proposal with $180 million in cash spending.

Rep. Marion O’Neill, R-Maple Lake, called the resolution, which raises net spending from $51.75 billion to $59.11 billion “spending on steroids.”

Currently, the forecasted revenue for fiscal years 2022 and 2023 is $57.29 billion. Carryforward from the previous biennium is $3.69 billion, and there are $20 million in cancellations. Together, there is $61 billion available.

Under the Democrats’ plan, the balance after the net spending would be $1.89 billion. Without it, the state would have a $9.25 billion surplus for the biennium, Minnesota Management and Budget forecasted in February.

The office released its April Revenue and Economic Update, in which the state’s macroeconomic consultant, IHS Markit, anticipates U.S. annual real GDP will grow 3.0%, down seven-tenths of a percentage point from its February forecast because of Russia’s invasion of Ukraine’s impact on food and energy prices, global economic growth and investors’ reallocations toward safer assets, along with weaker first-quarter data for inventory investment and net exports. Forecasts for 2023 growth are 0.1 percentage points higher than they were in February. Net general fund receipts were $666 million higher than the February forecast had predicted, but that was mostly due to timing of pass-through entity tax payments and refunds, the department said.

Rep. John Petersburg, R-Waseca, said the state should be conservative in spending to avoid a deficit and budget cuts because Minnesotans’ spending of federal stimulus money contributed to the surplus, while Rep. Jim Nash, R-Waconia, said 8.5% inflation should be considered in spending.

Rep. Pat Garofalo, R-Farmington, unsuccessfully proposed an amendment to spend $1.7 billion to repay the federal government for unemployment benefits and replenish Minnesota’s unemployment insurance trust fund.

“(This) resolution would use our House Rules to prohibit us from fixing the problem,” he said. “At a time when we have an over $9 billion surplus, the budget resolution we’ll be voting on would prohibit you from reversing a tax increase that you let go into effect.”

The House Ways and Means Committee has yet to approve a bipartisan plan to use $1.15 million in American Rescue Plan funds and state general fund dollars to repay a $1.2 billion debt to raise the unemployment insurance trust fund to zero.

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