State Rep.

Monday, March 05, 2001

State Rep. Rob Leighton (DFL-Austin) says a 20 percent shrinkage in the state’s budget surplus demands caution.

Leighton said it is more important than ever to find a "balance between tax cuts and new investments in the 2002-2003 budget.

"While we still have a large budget surplus, this should be a warning that the economy is suffering and we should not make unsustainable commitments to either tax cuts or new spending," Leighton said.

"This reduced surplus demands moderation on both sides of the equation," Leighton said. "We can still make needed investments in education, in infrastructure and other areas and we can still have tax cuts and a rebate."

"But we have to be cautious not to go to far either way or we risk seeing a shortfall in 2002 or 2003," the legislator reminded.

The projection for the current -year budget surplus is $856 million, $67 million less than the projection issued last November.

For the 2002-2003 budget period, which begins July 1, the surplus is now estimated at $1.5 billion. That’s $551 million less than was forecast last November.

The surplus forecasts are prepared by the state Department of Finance based on national and state economic data supplied by national economic research firms. Those forecasts say there is a 40 percent chance of a serious national recession striking in the coming two years.

Leighton said the shrinking surplus will force both Gov. Jesse Ventura and state legislators to make their priorities clear.

"I believe that Minnesotans want balance," Leighton said. "Although they clearly want some tax relief, they also believe it is important to make needed investments in education, nursing homes and transportation."

He also observed that Ventura’s budget proposal uses 89 percent of the projected surplus for tax cuts and rebates.

"The governor’s plan is short-sighted and unbalanced," Leighton said.

Leighton wants the legislators to focus on reform and tax cuts in the area of property tax.

"I believe that property tax reductions are the most effective to provide relief to both homeowners and business owners," Leighton said. "Escalating property taxes are especially hard on senior citizens, many of whom live on fixed incomes."