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Minnesota Update
Minnesota’s Budget Surplus Reaches Record Level
This morning Minnesota Management and Budget (MMB) released the November Budget Forecast showing a projected state budget surplus of $17.6 billion for the coming biennium. There was a surplus of an estimated $7 billion at the conclusion of the 2022 legislative session, but collections have increased since then, and the current biennium is expected to end with an $11.6 billion budget surplus. According to a statement from MMB, lower than projected spending and strong tax collections added to the surplus.
It was noted that the forecast and budget does not account for inflationary spending increases that will reduce the surplus. Inflation is expected to reach 8.1 percent this year, a 3.6 percent increase from what was projected in the February 2022 forecast. Another key factor in the coming biennium is the mild recession state economists believe may extend into and slow economic growth through 2027.
Additional details on the budget forecast and the overall economic health of Minnesota can be found here.
Governor Walz has commented that he will push for tax rebate checks this coming session, despite past pushback from both parties at the legislature. He will likely start at $1,000 per individual and $2,000 per family, which was his proposal last session. Republicans in both the House and Senate immediately called for permanent tax cuts. The Legislature and Governor must agree on a biennial budget by May 22, 2023.
Awaiting the Announcement of Committee Assignments
In recent weeks, both the Senate and House majority caucuses have released their plan for committee structure, including committee chairs and meeting schedules. We are waiting on the release of full committee assignments. There will be further information on membership and full schedules in the upcoming weeks as the House and Senate prepare for the January 3rd start of the 2023 legislative session.
Important Dates to Remember:
- January 3rd: First of the 2023 legislative session
Federal Update
Eyes on the Peach State: The Georgia runoff is upon us, with voters lining up outside polling places once again in the Peach State to cast their votes for Democratic Senator Raphael Warnock or Republican football legend Herschel Walker. Warnock finished ahead of Walker on November 8, just short of 1 point. Senator Warnock holds that slight edge over his opponent. Control of the Senate was decided by other races, but a win for Warnock would mean Democrats tilt their majority to 51-49. Another seat also would mean a slightly stronger hold by Democrats on committees, weakening the power of Republicans to block some presidential nominees and partisan bills from advancing to the floor.
Earmarks are here to stay: House Republicans voted Wednesday against a proposed earmark ban during a conference rules meeting, a vote that held larger implications as House Minority Leader Kevin McCarthy (R-CA) seeks to become speaker. The conference voted 52-158 against an amendment proposed by Congressman Tom McClintock (R-CA) that would get rid of the current conference rule allowing members to earmark spending bills if they meet certain transparency criteria. Democrats, led by House Appropriations Chair Rosa DeLauro, brought earmarks back in 2021 with transparency rules requiring members to publicly disclose their backing for a project, justification for the spending and a cap at 1 percent of annual discretionary spending. The current rules also ban for-profit recipients, but state or local governments and eligible nonprofits are allowed.
Government funding: The government runs out of money in 10 days. Senior lawmakers in both parties have been trying to cut an agreement for a yearlong omnibus funding package. Although, they remain tens of billions of dollars apart – especially on non-defense spending. Senate Majority Leader Chuck Schumer (D-NY) huddled separately with Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Mitch McConnell (R-KY) Monday. Meanwhile, President Joe Biden had lunch with Sens. Pat Leahy (D-VT) and Richard Shelby (R-AL), old colleagues who are the top two figures on the Appropriations Committee.
Remember a few things here: It seems almost certain that Congress will need to pass a short-term stopgap funding bill sometime ahead of December 16 to give itself more time to try to reach an omnibus deal. So we view the real deadline as sometime between December 23 and the end of the year. There are dozens of policy riders that still need to be resolved. Once a “topline” deal is reached, it will take time to assemble the omnibus package, send it to legislative counsel and release it publicly. It will take the House a few days to pass it, and then the Senate will need several more days to complete its work. There will be last-minute snafus as well; there always are.
This sounds daunting, but the political incentives point to Congress being able to figure everything out. House and Senate Democrats want to get one more long-term spending bill into law before the year is up. Many Senate Republicans don’t have much faith in a GOP-run House being able to properly pass a government funding bill in the first few months of next year. House Minority Leader Kevin McCarthy can’t say it out loud – or openly support an omnibus – but he benefits from a long-term funding bill being signed into law now.
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