At today’s debate, Republican Tom Emmer questioned those who were challenging him to release specifics on how he intends to plug a $5.8 billion budget gap. Democrat Mark Dayton has called for increasing taxes by $4 billion mostly through income tax increases on Minnesota’s top earners, closing corporate loopholes and gambling expansion. Independence Party candidate Tom Horner is calling for a mix of tax hikes on alcohol, cigarettes, clothing and an expansion of gambling. He also wants to cut business taxes.
Emmer has repeatedly said he intends to balance the budget without raising taxes. When challenged to produce his budget, Emmer replied:
“Where is the deficit? We talk about ‘You got to raise taxes, government has to invest.’ I’ll say it again, government in the state of Minnesota is scheduled to get a 7 percent increase in the next biennium. Government will have more money to spend in the next two years than it is spending right now. And yet the folks that want to raise taxes want to talk about a $6 billion deficit which is created on paper because government wants to spend $38 billion instead of the roughly $32 billion that we have.”
Emmer is correct that revenues are projected to increase 7 percent, according to documents released by Minnesota Management and Budget (see page 1, Subtotal Current Resources). The document also says spending is set to increase 17 percent in the next two year budget (see page 1, Total Expenditures and Transfers).
Part of the reason for the sharp increase in spending is the reliance on one-time money to balance the state’s current two-year budget. Those fixes include a K12 payment delay to schools ($1.4 billion) and the one-time spending cuts ($670 million) initially cut by governor Pawlenty through unallotment and later ratified by the Legislature.
If Rep. Emmer also declines to shift patients currently enrolled in MinnesotaCare and General Assistance Medical Care into the federal Medicaid program (known as MA expansion), it would save the state $360 million. He would also benefit if Gov. Pawlenty opts to take federal money (known as FMAP) allocated through the recently passed Education, Jobs and Medicaid Assistance Act ($230 million).
If Emmer declines to pay back the K12 shift, accepts the spending cuts originally made through Gov. Pawlenty’s unallotment, declines to take the MA expansion funds and Pawlenty accepts the FMAP funds, the projected budget deficit would be reduced by roughly $2.7 billion. That means Emmer would be facing a $3.1 billion budget deficit if he’s elected.
And that is only if there is not a change to the state’s current economic position that would be reflected in the November and February budget forecasts.