Governor Dayton’s proposed supplemental budget makes investments in education, health and human services, economic development, saves for the future

Governor Mark Dayton released his FY 2018-19 supplemental budget proposal today, focused on making strategic investments to support Minnesota’s economic success, prioritizing working Minnesotans in responding to the federal tax bill, and leaving some of the state’s projected surplus unspent “to cushion against risk.”

The supplemental budget describes Dayton’s proposed changes to the two-year state budget passed last year. Dayton proposes $227 million in net additional general fund spending and $20 million in net revenue increases in FY 2018-19, leaving $206 million of the projected surplus unspent, or “on the bottom line.”


Here’s our first look:


Dayton’s largest new investments are for the education of Minnesotans at all ages. He recommends $21 million in FY 2019 for the Safe and Secure Schools Act to improve the security of students through building improvements and student supports. He also includes an additional $17 million in FY 2019 for special education. Dayton also proposes $57 million in FY 2020-21 to expand access to pre-kindergarten.

Dayton proposes improvements for Minnesotans pursuing higher education as well. He includes $10 million each to Minnesota State and the University of Minnesota to keep the cost of tuition down. He also includes an important improvement to financial aid. Minnesota Dreamers – young people who came to the country as children and do not have legal status – are ineligible to receive federal Pell Grants. However, the State Grant formula currently calculates financial aid assuming students receive this federal grant, meaning that Dreamers receive much less aid than they need to afford college. The proposal would increase the grant award for these students, making college education more in reach for all Minnesota’s young people.

Health and Human Services

Governor Dayton proposes an additional $2.5 million in FY 2019 and $15 million in FY 2020-21 in child care. These investments are intended to avoid disruptions in child care for families and better prepare children for school. These improvements are essential to making sure parents can join the workforce and kids can grow in stable and nurturing environments.

Dayton also maintains an essential funding source for affordable health care by repealing the sunset of the provider tax. The provider tax provides the majority of the revenues for the Health Care Access Fund but is currently set to expire on December 31, 2019. By ensuring this revenue continues for MinnesotaCare and Medical Assistance, Dayton is taking an important step to ensure low- and moderate-income Minnesotans can continue to get the health care they need.

Affordable health care is also expanded through the MinnesotaCare buy-in option, which would allow Minnesotans who don’t already qualify for MinnesotaCare or Medical Assistance to purchase health insurance through MinnesotaCare. After initial set-up costs of about $171 million, individual premiums are projected to sustain the program into the future.

Other important funding proposals include addressing opioid treatment and addiction, and strengthening consumer protections for seniors and other people living in care facilities.


One the major challenges in this legislative session is responding to the recent federal tax bill. As in his past tax proposals, Governor Dayton prioritizes everyday Minnesotans and maintaining the revenues needed to fund essential services.

Dayton’s tax plan would protect seniors, people with disabilities, and families with dependents from seeing a cut in their Property Tax Refunds, which would occur from conforming to the federal tax code.

In addition, Governor Dayton continues his commitment to Minnesota workers and their families through an expansion of the state’s Working Family Credit, helping working families meet their basic needs and get children off to a stronger start. This proposal is similar to the expansions Dayton has proposed in the past, and would provide an average $160 tax cut for 329,000 Minnesota workers and families.

Simply conforming to all the federal tax changes that impact the state is estimated to raise $459 million in individual and corporate taxes in FY 2019 and more in future years. Preliminary analysis by the Institute on Taxation and Economic Policy estimates that about one-third of Minnesota taxfiling households would see a tax increase if Minnesota conformed to the major income tax changes.

Instead, Dayton proposes to keep Minnesota’s tax code as it was before the recent federal changes. It would prevent tax increases by allowing Minnesota families the same standard deductions and personal exemptions as before, and those who itemize would continue to be able to take the same deductions, such as for charitable giving and property taxes. In addition, it creates a new $60 per-person tax credit. Budget documents estimate that more than 1.9 million Minnesota families would receive an average tax cut of $117.

In addition, Dayton’s budget plan would reverse three tax cuts enacted in last year’s tax bill: on tobacco products, the commercial/industrial state property tax, and the estate tax.

Jobs and Economic Development

Governor Dayton continues to prioritize expanding broadband service in underserved areas so that Minnesota’s economic success reaches into every corner of the state. He proposes adding $30 million in additional one-time funding for grants that are expected to expand access to broadband for thousands of Minnesotans.

Preparing for Uncertain Future

The Governor leaves a significant portion of the projected surpluses for FY 2018-19 and FY 2020-21 on the bottom line – $206 million in this biennium and $182 million in the next. The state’s current projected budget surpluses are certainly good news, but they don’t guarantee a positive economic and budget outlook into the future. Forecasters had the tough job of predicting how people and businesses would response to the sweeping federal tax bill. Additionally, our state’s projected surplus could swiftly be cancelled out if federal policymakers follow through with any of several proposals to deeply cut federal funding to the state.

Considering increased uncertainty from federal policy changes, it is crucial for policymakers to set Minnesota up for success. Leaving a significant portion of projected surpluses on the bottom line while making targeted investments to support Minnesotans is a good way to do that.

-Clark Goldenrod, Sarah Orange, Nan Madden

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As rising rents outstrip Minnesotans’ incomes, affordability policies are under threat

A full-time worker needs to earn $18.60 an hour to afford a modest two-bedroom apartment in Minnesota. That’s up from $17.76 in 2016, and is nearly twice the state minimum wage for large employers. The gap between Minnesotans’ wages and prices in the rental market underscore the importance of policies to increase the number of renters that can afford their basic necessities without sacrificing housing stability.

The National Low Income Housing Coalition’s annual Out of Reach report details how much a full-time worker needs to earn in each state in order to spend less than 30 percent of their income on a modest one- or two-bedroom apartment. The Minnesota Housing Partnership takes a deeper dive into the data at the state level, finding that a full-time minimum-wage earner can’t afford a modest one-bedroom apartment in any county in the state.

Minnesota takes a multi-pronged approach to addressing the high cost of rental housing, and in the budget passed last session, policymakers invested an additional $77 million in affordable housing. These reports — along with data showing that about 45 percent of Minnesota renters pay roughly one-third or more of their incomes on rent — demonstrate that we still have a ways to go before every Minnesotan can afford to put a roof over their heads.

The mismatch between earnings and housing costs is found across the state. Over the past decade, the wage a full-time worker needs to earn to make a typical two-bedroom apartment reasonably affordable has increased 20 percent in rural areas of Minnesota. To fit rent comfortably in their budget, a Minnesotan living in a rural area and earning the minimum wage would typically need to work about 58 hours per week. In the Twin Cities metro area, a minimum-wage earner would need to work 88 hours per week to spend less than 30 percent of their rent for a two-bedroom apartment.

Unfortunately and perhaps surprisingly, some important tools to ensure more Minnesotans can afford housing are under threat because of the recent federal tax bill. You may already have heard how the tax bill’s deep cuts in corporate taxes makes the Low-Income Housing Tax Credit less effective and will likely result in a loss of affordable housing.

Minnesota’s renters could be facing another squeeze. The federal tax bill could punch a hole in a tax refund that puts a limit on how much Minnesotans pay in property taxes (one important component of housing costs). The state’s Property Tax Refund is also commonly known as the Circuit Breaker (for homeowners) and the Renters’ Credit. The Renters’ Credit refunds a portion of the property taxes that renters have paid through their rents.

About 328,000 low- and moderate-income Minnesota households across the state received the Renters’ Credit in 2015, all of whom had property taxes considered high for their income level.

But the federal tax bill could cut Property Tax Refunds for renters by $34 million and for homeowners by $50 million per year. That’s because the Property Tax Refund formula allows an exemption for seniors, people with disabilities, and families with dependents that is calculated based on a provision in federal law that has essentially been repealed. Minnesota needs to restore these exemption amounts in our state law to avoid deep cuts in the Property Tax Refund.

The Renters’ Credit remains as important as ever as rental prices increase more quickly than renters’ wages. As Minnesota policymakers think about how to address the state’s affordable housing challenges in 2018, they should support this time-tested tax policy.

-Ben Horowitz and Nan Madden

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Investment in child care is a critical investment in Minnesota’s workforce

Our state’s economy has been vibrant for the past several years, and a significant factor in this success is our strong workforce. But as the labor market has gotten tighter, employers in some industries and parts of the state struggle to find the workers they need. A significant barrier keeping Minnesotans out of the workforce is the lack of affordable child care.

Child care can be one of the largest expenses families with children face. For example, in 2017 the average annual cost of infant care at a child care center in Minnesota was $15,340. These costs are burdensome for many families. But it doesn’t have to be this way. Minnesota already has a mechanism to bring down the cost of child care for working families.

The Child Care Assistance Program, or CCAP, helps parents afford child care while they are at work or looking for a job, and gives children a safe and nurturing environment. Affordable child care helps build the workforce we need today and is a down payment on Minnesota’s future workforce.

Targeted improvements in Child Care Assistance would make the system work better for families and providers. These changes would create stability for children, working parents, and providers and bring Minnesota in line with recent federal changes.

Eliminating barriers and creating stability for families. Minnesota’s Child Care Assistance Program can better serve families with a few simple changes that would have a big impact. Changes that would streamline the system include: eliminating the six-month limit on assistance when a family moves to a county with a child care waiting list, making it easier for families moving off of Minnesota Family Investment Program to retain child care, and adjusting the application and activity requirements for families experiencing homelessness.

Updating out-of-date provider rates. Updating the state’s reimbursement rates to providers would both expand families’ choices of providers and help address the financial challenges facing child care providers. The state’s current payments to providers through CCAP have not kept up with costs of providing care. In 2016, provider rates only covered 29 percent of the prices charged by child care centers and about 22 percent of the prices  in-home providers charged. This is a dramatic decline from 2003, when about 80 percent of providers’ costs were covered by these reimbursements.

The low CCAP reimbursement rates may result in providers refusing to accept CCAP families or accepting CCAP families at a financial loss. Updating the provider rate to cover a greater share of the cost of caring for children will help providers keep their doors open.

Investing in Minnesota’s workforce, particularly during this tight labor market, could help ensure our state’s economy continues to thrive. While Minnesota only has a small surplus to invest this legislative session, prioritizing child care investments would benefit both working families and businesses across our state. We can’t afford to have Minnesotans unable to go to work because they can’t afford child care. The time is right to take steps so that families can build a better future and strengthen Minnesota’s economy.

-Sarah Orange

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February forecast brings welcome news, but uncertainty still reigns

Today the state’s Minnesota Management and Budget released the February Budget and Economic Forecast. The February forecast compares what the state would be expected to spend on schools, roads, and other public services under existing laws and current projections for economic growth, and how much revenue the state would expect to bring in. This forecast will set the stage for making budget and tax decisions in the current legislative session.

Today’s forecast showed a $329 million surplus for FY 2018-19, the current budget cycle, and $313 million for FY 2020-21. These numbers are an improvement over what was shown in the November forecast. Since November, federal policymakers reauthorized funding for the Children’s Health Insurance Program (CHIP) and enacted a major tax bill. And at the state level, policymakers passed funding for the Legislature just this past week. Today’s projections takes into account these recent changes.

Here are our top takeaways:

  1. The forecast projects a $329 million surplus for FY 2018-19. That equals less than one percent of the total two-year budget, which runs through June 30, 2019.
  2. The February forecast also projects a future structural balance. Today’s report shows a $313 million positive balance for the upcoming FY 2020-21 biennium. However…
  3. The future balance does not take into account what it takes to maintain current levels of state services. Keeping up with inflationary costs on Minnesota’s current commitments would cost another $1.2 billion in FY 2020-21. In other words, these projections are built on the assumption of flat funding for many areas of the budget.
  4. The forecast expects stronger short-term economic growth than projected in the November 2017 forecast. Every forecast includes a best guess at what the national economy will do over the next few years, and today’s report expects the economy to continue growing. National GDP growth is expected to be faster: 2.7 percent in both 2018 and 2019, rather than the 2.5 and 2.2 percent expected in November. However, this boost is short lived. By 2021, economic growth is expected to drop below November’s estimates to 1.9 percent. These figures include a modest annual increase 0.1 to 0.3 percentage points through 2021 from the expected economic impact of the federal tax bill.
  5. There are a number of sources of uncertainty. IHS Markit, Minnesota’s economic consultant, assigns a 65 percent probability to their baseline economic forecast, a 20 percent probability to a more pessimistic scenario, and a 15 percent probability to a more optimistic scenario. In addition, this forecast includes projected revenue increases that are anticipated to occur as a result of the federal tax bill; however, predicting how people and businesses will respond to the federal tax bill is tricky and we’re in some uncharted territory. And while federal policymakers have put proposals on the table that would deeply cut federal funding to the state, the forecast does not assume any changes to the federal budget that have not yet been enacted.
  6. This is one-time good news. It’s important to note that the surplus is largely due to temporary, not ongoing, factors. The federal tax bill is expected to bring short-term economic growth, but that impact is expected to be followed by slower economic growth in future years.

What do these numbers mean for the tax and budget choices that policymakers will be facing during the 2018 Legislative Session?

Governor Mark Dayton’s supplemental budget proposal for FY 2018-19 is expected to be released mid-March, and the Legislature will make choices this session about how to respond to both the news in the state forecast and the federal tax bill passed last year. Since policymakers passed the state budget for the FY 2018-19 biennium last year, any budget and tax changes passed this year will be supplemental to what’s already in law.

Policymakers must keep in mind that underlying the positive forecast figures is a higher than usual uncertainty, and they must avoid using temporary boosts in state revenues to fund ongoing commitments. Failing to heed these cautions could create funding shortfalls in the future and weaken the state’s ability to respond to potential cuts in federal funding or an economic downturn.

These principles are especially important to bring into the task of responding to the federal tax bill. This sweeping and complicated piece of legislation traveled quickly through Congress and passed days before Christmas, which means tax policy experts and the public are still working to understand the implications. Because Minnesota’s individual income tax and corporate tax systems use federal tax law as their starting point, Minnesota policymakers have to decide whether to follow those new federal changes.

Their response should be grounded in Minnesota values, including treating all taxpayers fairly and the importance of fiscal responsibility and maintaining the revenues needed to sustainably fund the state’s priorities. Initial analysis shows that fully conforming to the federal tax bill would raise revenues from both the individual income tax and corporate taxes. But the impact would vary – some Minnesotans would face tax increases, such as families with dependents and people receiving property tax refunds, while others would see tax cuts. Taking targeted action to avoid raising taxes on low- and middle-income taxpayers should be a priority. Minnesota also can’t afford to enact large additional state tax cuts for those who will be receiving the largest federal tax cuts: profitable corporations and the highest-income households. Doing so would reverse the state’s progress toward a tax system that is more equitable to Minnesotans of all income levels.

Given the high level of uncertainty – about the economy and future federal funding – now is a good time to strengthen our state’s budget reserve. In fact, if this surplus had occurred in November, under state law about $117 million would have gone into the reserve. That addition would bring the reserve to 79 percent of the level recommended by Minnesota Management and Budget to be able to get through most recessions that might come our way.

In a time of great uncertainty, policymakers have an opportunity to work toward making our state a place where everyone can thrive.

-Clark Goldenrod

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Survey: Your feedback will shape our new website

We’re happy to announce we’ve begun a website redesign process this spring, with an expected launch before the end of the year. A positive user experience is one of our highest priorities. To that end, we’d love to hear from you. Your input will help shape both the design and content of our new site. We estimate it will take you less than 10 minutes to complete the survey.

Simply click on the link, or cut and paste the entire URL into your browser to access the survey:

We would appreciate your response by Monday, March 5.

Your insights are very important to us and they will be kept strictly confidential and used only for the purposes of this project.

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Trump’s budget would pay for tax cuts for the wealthy and corporations by cutting supports for struggling Americans

Last week, President Donald Trump laid out his vision for the country in his FY 2019 proposed budget. Just a short time after federal policymakers enacted a tax bill that gave the largest tax cuts to those doing well, Trump’s budget calls for cuts in essential services that support Americans trying to make ends meet.

The president’s budget doesn’t create policy change on its own. Congress does the work of passing the budget, and earlier this month Congress passed their guidelines for the FY 2018 and FY 2019 appropriations. But Trump’s proposed budget shows where his priorities lie; portions of it will get serious consideration, and could well be enacted either through legislation or administrative action. His proposed budget woefully underfunds our roads, cuts supports out from under those struggling, and further damages the nation’s ability to meet our future needs by increasing the national deficit.

Trump’s budget cuts critical services that low- and moderate-income Americans count on. The president’s budget proposes cutting many supports for Americans trying to thrive in today’s economy, and even reversing additional funding that was included in the bipartisan Congressional FY 2018 and 2019 budget deal. His budget would:

  • Reverse historic gains in health insurance coverage made under the Affordable Care Act (ACA) by severely cutting Medicaid and gutting protections for people with pre-existing conditions. This would leave millions of Americans uninsured or underinsured. In Minnesota, the impact of the president’s budget would be eliminating affordable health care coverage for about 200,000 who gained access from the ACA’s Medicaid expansion, and ending federal funding for 100,000 Minnesotans using MinnesotaCare.
  • Cut food assistance through SNAP (formerly known as Food Stamps) by nearly 30 percent over 10 years. More than 500,000 Minnesotans could put food on the table in 2017 thanks to SNAP.
  • Undo the increased funding for the Child Care and Development Block Grant included in the recent budget agreement intended to help states meet new quality requirements and reach more families. Instead, Trump’s budget would underfund child care affordability programs, making it more difficult for parents to find and keep good jobs.
  • Completely eliminate services including: the Low Income Home Energy Assistance Program (LIHEAP), which helps low-income families pay for heat; the Community Services Block Grant, which funds state, local, and nonprofit programs that fight poverty; and the Social Services Block Grant, which funds services for seniors and people living with disabilities, people experiencing homelessness, and children.

President’s “major” infrastructure investment is essentially a sham. While Trump’s budget touts his plan as supporting $1.5 trillion in investments for “world-class infrastructure” and “stunning new bridges,” in reality it would do very little to meet the infrastructure needs of our country. Instead the budget would shift funding responsibility to states, cities, and individuals – through likely new regressive taxes and fees – expecting them to pick up $1.3 trillion of that investment.

Budget relies on unsound economic assumptions. Like last year, Trump’s budget again uses unrealistic economic and revenue assumptions, such as much larger economic and revenue growth from policies like the tax plan passed in December than non-partisan economists find likely. That means the president’s budget, including its dramatic increase in military spending, and the 2017 tax plan, will drive up the national debt even more than the budget shows, presenting an even more serious threat to the country’s ability to fund essential services in the future.

Trump’s budget proposal would take the country on the wrong track. The budget lays bare how the 2017 tax cut legislation would be paid for – through deep cuts in the investments that help struggling Americans get by and get ahead. It fails to make the investments in our nation and communities that contribute to broader prosperity. This is a blueprint for increased misery and income inequality, not for a better future.

-Clark Goldenrod and Sarah Orange

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New Medicaid requirements will create barriers to health care

Since its origin in 1965, Medicaid has stood as America’s promise to care for our neighbors and loved ones, providing health insurance for people who have nowhere else to turn. One million Minnesotans, a significant portion of which are seniors and people with disabilities but also include low-income individuals and families, receive health care through Medicaid, called Medical Assistance in Minnesota. However, federal policymakers have reneged on that long-standing promise by fundamentally shifting the priorities of Medicaid away from providing health care to low-income people.

Last month, the Centers for Medicare and Medicaid Services (CMS), the federal agency that oversees Medicaid, announced that it will approve state requests to require some Medicaid recipients to participate in work activities in order to receive health care. This defies 53 years of precedent and fundamentally changes Medicaid, potentially cutting off health care coverage for 6.3 million people across the U.S. who cannot work or find a job. Adding new barriers to health care for low-income people is counter-productive. The majority of people on Medicaid who are able to work do so, and those who do not work face substantial barriers to finding and keeping a job.

The general parameters for this new state option are that working-age people who do not have a recognized serious disability must complete and report work activities in order to continue to receive health care through Medicaid. According to CMS, work activities can include things like volunteering, participation in job training, caregiving, or active treatment for a substance abuse disorder; however, states will be able to define the exact requirements.

Adding requirements to work is a solution to a non-existent problem. The reality is the majority of working-aged, healthy adults on Medicaid already work. In Minnesota, 73 percent of low-income families participating in Medicaid have at least one adult with a full-time job. Additionally, over 50 percent of Minnesota Medicaid participants work in labor-intensive jobs in agriculture or manufacturing, and without reliable access to health care, their capacity to complete their work and remain gainfully employed can suffer.

Even for Medicaid participants who have a job, complying with the reporting requirements will likely prove burdensome and could cause some to lose their coverage because of paperwork snafus. Many of the current state proposals require people to report their hours either bi-weekly or monthly, which creates significant barriers to health care. For example, a person who becomes sick, misses work for a week, and is unable to make up their shifts prior to their next reporting period can be sanctioned or even lose health care coverage despite having a job. Taking away their health care coverage makes it more difficult to keep working.

People on Medicaid who aren’t currently working often face barriers to stable employment, such as poor health or a lack of jobs in their area. Thirty-five percent of non-working Medicaid participants in Minnesota face health issues, such as some mental health conditions, that can interfere with their ability to find and keep a job, but would not exempt them from having to meet the proposed work requirements. Others who want to work struggle to find jobs in their communities because there are few jobs to be found. It is counter-productive to take away health care for people who are seeking to improve their health so that they can go to work, or are unable to find a job in their community.

This brings us to the fundamental problem with this approach: Medicaid itself already supports work. If people aren’t healthy, they will not be able to sustain employment. While the Minnesota Legislature has not authorized the state to implement these changes in Medicaid, some legislators have indicated they are interested in exploring this idea. Ultimately implementing new eligibility hurdles to access health care is inconsistent with the promise of Medicaid and Minnesota’s commitment to affordable health care. Minnesota must stand against counter-productive new requirements in Medicaid that hurt Minnesotans’ ability to lead healthy lives.

-Sarah Orange

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Minnesota’s budget reserve an important source of stability in tough times

This fall, the state’s November Budget and Economic Forecast projected a slight state budget deficit for the remainder of the FY 2018-19 budget cycle. Some pointed to the state’s budget reserve as a possible solution for balancing the budget. Last year, state policymakers tapped into the state’s budget reserve to fund health insurance premium assistance.

For the budget reserve to actually function as the state’s rainy day fund, the reserve has to be allowed to build up so that those funds will be there when they’re really needed. In these uncertain times, here are some thoughts on the importance of a strong budget reserve, and why policymakers shouldn’t be too quick to tap into it.

  1. Decisions around using the budget reserve should take into consideration more than just budgetary projections. That’s not just our opinion. The Minnesota statute on budget reserves notes that, “The use of the budget reserve should be governed by principles based on the full economic cycle rather than the budget cycle.” Right now, the United States is in its ninth year of economic expansion since the last recession. This is uncommonly long, and given the length of the current economic recovery, it’s likely that the next recession isn’t too far away.
  2. During a recession, the needs of Minnesotans grow – just at the time that the resources our state relies on to meet those needs shrink. In the same way a family might save to be able to make it through a long illness or job loss, Minnesota keeps its reserve so when a recession hits, the state can avoid drastic cuts in essential services and continue to serve Minnesotans’ needs.budget-reserve-updated-fall-2017-01
  3. Past deficits during recessions have dwarfed the amount currently in our budget reserve. Every year Minnesota Management and Budget sets a goal for the budget reserve that would get the state through most recessions. However, we haven’t saved that much yet, and past recessions have created deficits that were much larger than the current reserve.
  4. A healthy level of reserves gives policymakers the time they need to make responsible and thoughtful budget choices. Reserves provide a financial cushion to respond to budget shocks, whether in response to tough economic times or other dramatic changes. For example, federal policymakers have put forward proposals that would fundamentally weaken federal-state partnerships, reducing federal funding and shifting responsibilities to the states in areas as diverse as food assistance to health care. Should such proposals pass, Minnesota could need to identify and implement other ways of funding essential services, and reserves can help bridge a funding gap during the transition.

Building strong budget reserves is one important tool to put our state in a strong position to respond to future economic downturns or big federal budget changes. In contrast, moving too quickly to tap into the budget reserve won’t set us up for success in the future.

-Clark Goldenrod

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Minnesota’s January economic update shows welcome news for revenues and economy

The recently released January Revenue and Economic Update gave us somewhat welcome news about the state’s economic and budget landscape. The quarterly report from Minnesota Management and Budget (MMB) showed that recent state revenues have come in above projections, and national economic growth is expected to be slightly higher for the next few years than previously projected.

Some of the top takeaways from the Update include:

1. State revenues are coming in above projections. The state’s revenues for November and December 2017 came in $219 million above projections; that’s 5.9 percent more than projected in the state’s November 2017 Economic Forecast. This is primarily due to higher income taxes received, but some of this may simply be a matter of timing. The Update notes that the tax bill recently passed by Congress likely encouraged some taxpayers to pay taxes due in January in 2017.

2. Slightly higher national economic growth projected over next few years. The national economic forecasters predict 2.7 percent national GDP growth for 2018. Growth projections for both 2018 and 2019 are higher than anticipated in the November forecast. This higher growth is expected to dissipate by 2020 though, in which projections are slightly below the November forecast. The update notes that the faster economic growth is driven by stronger consumer spending and business investment, while the federal tax bill should also have a “modest” impact on economic growth.


3. Unemployment nationally expected to remain low, strong consumer spending expected. Nationally, unemployment in December was 4.1 percent. Unemployment is expected to drop slightly further over the next few years. Consumer spending is also forecasted to be strong, supported by rising wages and other variables.

4. Forecasters are fairly confident in their projectionsThe forecasters assign a 65 percent chance to their baseline forecast. They also give a 20 percent chance for a more pessimistic scenario and assign a 15 percent probability to a more optimistic scenario.

This week’s Update brings us good news, but there’s still reason for caution. At the federal level, policymakers have proposed serious funding cuts that will make it more difficult for Minnesota to continue to make the investments that strengthen our state and build shared prosperity. In 2017, President Donald Trump and the U.S. House and Senate put federal budget plans on the table that include massive cuts to health care funding, non-defense appropriations, and assistance to low- and middle-income families through the portion of the budget that includes SNAP food assistance, Pell grants, and student loans. Many of these proposals would substantially reduce federal funding to state and local governments, making it more difficult to meet the needs of Minnesotans.

The next look at the state’s fiscal and economic health will be the release of the February Budget and Economic Forecast, which will give us a full picture of state revenues, expenditures and economic projections. The November forecast projected a slight deficit in the current biennium. This week’s update indicates a more positive picture is likely in the February forecast.

-Clark Goldenrod

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4 Reasons DACA should be restored ASAP

Deferred Action for Childhood Arrivals (DACA) has improved about 800,000 lives in the United States, and 6,300 in Minnesota. However, earlier this fall President Donald Trump announced his elimination of DACA and has left the fate of a program that has supported thousands of immigrant lives and communities around the country in the hands of the U.S. Congress. There are many reasons why Congress should pass legislation such as the Dream Act, that would provide lawful permanent status for DACA recipients. Here are four:

  1. DACA is important for building the future workforce that Minnesota needs. DACA recipients have been able to pursue educational opportunities they otherwise wouldn’t have been able to access. DACA recipients can also find higher quality jobs that better match their skills, and can get to and from their jobs more reliably, thanks to their ability to access driver’s licenses.
  2. DACA results in increased economic activity in our communities and increased tax revenues. DACA recipients in Minnesota contribute an estimated $15 million in state and local taxes annually.
  3. Because DACA permits aren’t being renewed, 122 Dreamers lose DACA every day in the United States. More than 10,000 have lost their DACA status to date. This means young people across the country are losing their work permits and their temporary relief from deportation. Researchers have calculated that removing all DACA recipients from our communities and our economy would wipe away $280 billion to $460 billion from the U.S. gross domestic product, or GDP, cumulatively over a decade. Minnesota could lose about $377 million of economic activity annually.
  4. DACA acknowledges the investments our country and state have made in young people who have grown up here, allowing them to further their educations and careers. DACA was created in 2012 as a common-sense way to recognize the investments we have made in the young people who have grown up here. Many DACA recipients are living, studying, and working in the only country they call home.

As hundreds of young people lose their DACA status each week, it is imperative that Congress pass legislation such as the Dream Act to restore protections for these young people. We’ve long urged that Congress pass immigration reform that respects the basic human dignity of immigrants, provides a path to citizenship, keeps families together, and protects the rights of and conditions for workers. The Dream Act is one small step toward this important goal.

-Clark Goldenrod

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