Minnesota, once a state drowning in debt, is now being forced to deal with a new problem: how to spend their projected $1.9 billion budget surplus.
The extra $1.9 billion is likely to be allocated toward early childhood education and providing high-speed internet to Minnesota residents, according to the West Central Tribune. Governor Mark Dayton, of Minnesota’s Democrat-Farm Labor Party, ran for office on a call to implement broadband internet “border-to-border” and has called for a $100 million infusion of funds, in conjunction with private investment, to build the initial infrastructure. While the total estimated cost to complete the job is $3.2 billion, Gov. Dayton has plenty of money to work with — the surplus is more than double what the state legislature had on hand by the end of this year’s legislative session in June.
So how did Minnesota come across all this money?
Rather than continuing to throw subsidies at corporations and offering them more tax breaks that would further stifle growth, Gov. Dayton implemented policies to stimulate real financial growth. Chief amongst them was raising income taxes on top earners by 2 percent. That, combined with a scaled increase to the state minimum wage, created an instant injection of money into his state’s stagnant economy that kept local businesses from shutting their doors.
Once the economy was stabilized, Dayton doubled down on his plan to stimulate growth from the bottom up by paying down the state’s debt and investing in Minnesota’s schools. This created an environment where people actually wanted to live and raise a family, essentially creating demand where before, people were leaving Minnesota to escape the lower quality of life that continues to plague states still clinging to trickle down policies.
Minnesota’s dramatic comeback provides a sharp contrast to Wisconsin, their neighbor to the east, where Governor Scott Walker has literally driven the state into the ground. Under Walker, Wisconsin broke up labor unions, driving down the average income of working class families that are the lifeblood of any economy. That, combined with his economic strategy of subsidizing industries to set up shop in his state while offering them huge tax-breaks, has bankrupted their once thriving economy.
Now, even though the national economy is facing uncertainty due to the continuing burden of student debt and flagging exports, Minnesota has almost $2 billion in state budget reserves and is forced to choose between increasing working family tax credits or lowering property taxes.
It is a problem most states would love to have.
