On Thursday, Minnesota Management and Budget (MMB) released its annual February budget forecast, which shows an estimated budget surplus of $1.513 billion for the 2020-2021 biennium. The forecast, which is updated twice each year to reflect revenues and expenditures, is used to guide the consideration of a supplemental spending during the legislative session. In accordance with Minnesota law, the forecasted surplus also accounts for an automatic transfer to the state’s budget reserve, which is fully funded.

“This latest budget forecast is more good news that our state’s finances are headed in the right direction – but, again, it’s a stark reminder that the government is collecting too much from taxpayers,” said Senator Andrew Lang (R-Olivia). “It also means our $1 billion tax relief package is within reach. At the top of the list is eliminating the Social Security income tax, full Section 179 conformity, income tax rate cuts, and more. The Senate will continue to lead on middle class tax relief and responsible spending that funds Minnesotans’ priorities but does not grow government or inflate our already massive budget.”

In February, Minnesota Senate Republicans announced a tax cut plan to return the budget surplus back to taxpayers. The multifaceted plan includes a series of more than $1.1 billion in total tax cuts aimed at benefitting low- and middle-income earners and families, including:

• A reduction to the lowest income tax rate, which would be the second consecutive year of income tax rate cuts;
• An expanded K-12 education tax credit, targeting more families with school-age children;
• Completely eliminating the income tax on Social Security benefits, bringing Minnesota in line with the other 37 states that do not tax Social Security benefits as income;
• Full conformity with Section 179 of the federal tax code, allowing farmers and small business owners to deduct large equipment purchases;
• Expanding the Angel Tax Credit, providing greater incentive to invest in Minnesota companies;
• Reforms to school equalization aid, providing more money to school districts with less property wealth and bringing property tax relief to all property owners in these districts;
• Reallocating more mortgage and deed tax revenue to affordable housing programs;
• Property tax classification and rate reductions, allowing more people to realize the dream of homeownership; and
• Reforms to charitable gaming rules, allowing local charities to invest more money in their communities. 

The 2020 legislative session must adjourn by May 18.

Senator Andrew Lang represents Chippewa, Kandiyohi, Renville, and Swift counties in the Minnesota Senate. He serves as vice chair of the Veterans and Military Affairs Finance and Policy Committee.