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.

The forecast shows we are not having budget trouble, but it also shows we’re collecting way too much from the taxpayers. Instead of adding more government spending to our bottom line, we have an opportunity to give the surplus back to the people of Minnesota,” said Senator Scott Newman (R-Hutchinson), chair of the Senate Transportation Finance and Policy Committee. “We are proposing more than $1 billion in tax cuts for every Minnesotan, including eliminating the Social Security income tax, full Section 179 conformity, and more. If you pay income taxes in Minnesota, you will benefit from our plan – and that’s what we should be doing with a budget surplus.”

Earlier this month, 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 Scott Newman represents communities in McLeod, Meeker, Sibley, and Wright counties in the Minnesota Senate. He serves as chair of the Senate Transportation Finance and Policy Committee.