Minnesota Tax Surplus Could be Good News for Families with Children

Published On: 17th December 2014

From the internet

Crafting a new budget may not be as difficult in Minnesota since it has a nice cushion to craft that budget.

It was recently announced that the state will be saying “hello” to a $1 billion surplus. It is this surplus that will set the bar for the start of the upcoming budget process, as legislators will need to figure out what they should do with the money.

State budget officials say that the surplus is the direct result of Minnesota sales tax, individual income tax collections, and spending cuts in the health and human services department. Because some of the funds will need to be transferred to the state’s budget reserve, it is expected that the surplus that ends in June, the end of the 2014-2015 fiscal year, will be $373 million.

It is said that the reduction in health care spending has much to do with a different composition of enrollees that are receiving medical assistance.

While there has been a slight increase in the number of enrollees for medical assistance, most of them have been adults without children. The number of families with children and individuals with disabilities that enroll in medical assistance has decreased.

In February, the last forecast was published and it stated that the state’s economy was growing as planned, aided by stronger growth in employment. The job gains have caused the unemployment rate to go down to a level that hasn’t been seen in eight years at just 3.9 percent.

Unfortunately, wage growth is projected to see slow growth when the 2014 numbers are evaluated. The rate of household formation is also affected, as the number of millennials that are burdened by student loan debt are not buying homes.

Nonetheless, the fiscal picture is much brighter than it was in 2013, which was the last time the state had a deficit.

These are all numbers that will give the governor guidance for his budget proposal. This proposal is to be submitted to the legislature on January 27. The governor has not yet stated any specific priorities, but it is likely to include a child-care tax credit.

This tax credit would help working families avoid child care costs. This is a goal that has been supported by many, as some are limited on their work possibilities because they have to worry about whether or not their children are cared for. Many times, childcare is too expensive and that hurts a family economically. They either have to decide to work fewer hours, are limited on employment possibilities, or one parent has to stay home because the cost eliminates the benefit for both to work and thrive economically. This is a problem that has been recognized for quite some time throughout Minneapolis and the Twin Cities and all through the state.

The governor may also see funding requests for transportation and a number of other ideas.

This $1 billion surplus will most likely make the next legislative session run much smoother. Republicans now hold the majority, but having the extra money is most likely to result in more cooperation between both parties rather than excessive conflict.