Surplus provides once-in-a-lifetime opportunity — don’t blow it | Opinion

Collective action sets Minnesota up for success; tax cuts do not

March 4, 2022 5:30 am

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Since the pandemic began, Minnesotans have been deluged with stories about our faltering public institutions. From over-crowded hospitals to understaffed schools to a shortage of child care, and the housing crisis underneath it all, our biggest social challenges have become a matter of broad familiarity and general consensus.

The obvious connections between these issues are now almost tiresome to recount. Unaffordable child care is exacerbating the labor shortage by forcing young parents to stay home and care for their children rather than work; a lack of affordable housing in greater Minnesota is feeding a cycle of low growth and stagnant investment; understaffing in schools is increasing teacher burnout and causing resignations and early retirements. 

Although education, housing and childcare may sound like purely progressive issues, the consequences of these failing systems have been dire enough to raise concerns among some unlikely observers. In their Minnesota 2030 report, the Chamber of Commerce argued for workforce-maximizing policies like accessible childcare, housing and college education in order to ensure a strong state economy. Republicans have also echoed these concerns, with an emphasis on aid to housing developers and child care providers.

The undeniable reality is that all of these problems stem from insufficient public funding of our basic needs. The provision of affordable housing, accessible child care, quality education and other public goods are not profitable to provide, and thus will not spring from the private sector. We lack them because our state government has chosen not to buy them, and the whole of our society is suffering as a result. It is that simple.

Thankfully, we now have the resources to make up for lost time. On Monday, Minnesota Management and Budget announced that the already-astounding $7.7 billion 2022-23 surplus may actually end up closer to $9.2 billion, with $6.2 billion more expected to accrue over the 2024-25 biennium, and another $1.2 billion in federal pandemic aid still left to spend. 

It’s enough one-time money to seed a generational investment in affordable housing, physical infrastructure and clean energy, as well as enough ongoing money to make leaps in child care, paid leave and education funding, while also fixing staffing and wage levels in key industries. 

For years, it was assumed that these sorts of investments would require large tax increases that posed a significant political barrier. Now, we have discovered more revenue than most of us would have ever dreamed of raising. The state could cap family child care costs at 7% of income tomorrow, raise the general education formula in perpetuity, increase housing investment 10-fold, and no one would pay a dime more in taxes. 

Dozens more smaller-scare issues could be resolved or improved, as well. Upgrades to state computer systems, for example, would allow for the more efficient delivery of public services and could even generate long-term savings. Or, an expansion of local government aid policies could turn back the tide of cities funding public works projects through local option sales taxes.

Unfortunately, instead of going to work on serious solutions, too many at the State Capitol are focusing the majority of their attention on how to hand the money out through tax cuts and rebates. Almost all of these ideas would disproportionately benefit large corporations and the rich, and even the most generous would give regular Minnesotans just a few dollars per week while leaving our gravest social challenges unaddressed. 

The things we need most — like better education and transit — we can’t buy as individuals. And with the paltry sums on offer, we wouldn’t be able to afford much of them anyway. 

Last week, Republicans rolled out a first-tier income tax cut that they dubbed the “largest in history.” For families earning enough income (about $70,000 per year with one child) to receive the maximum benefit, annual savings would equal about $1,000 — substantially less than a month of child care. At about $2.5 billion per year, the GOP plan would cost nearly double the early childhood investments proposed in Gov. Tim Walz’s supplemental budget, and would be enough to cancel tuition at all state universities or grant the largest K-12 funding increase in history. 

Yes, the surplus leaves room for negotiating over some one-time tax cuts, but the first priority must be to address the urgent crises threatening families, communities and businesses across the state. These challenges — not tax rates that have been in place for nearly a decade — are the problems we have spent the past two years lamenting, and now is our chance to resolve them. 

The surplus is our money, created by profits generated from the work of millions of Minnesotans, and it must be used to build a more stable, prosperous, and inclusive Minnesota for everyone. We cannot let this rare opportunity slip through our fingers.

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Eric Harris Bernstein
Eric Harris Bernstein

Eric Bernstein is a policy analyst focused on state tax and budgetary policy. Since the summer of 2020, he has been policy director for We Make Minnesota — a coalition of labor and community groups organizing to raise state revenue for investment in health care, education, racial equity, sustainable environmental stewardship and other public priorities.