As predicted by yours truly about this time a year ago, the DFL squandered a $18B “surplus” [1]

The DFL is contratulating itself that it still has a surplus of a couple billion dollars – which is a little like jumping from the top of the IDS building, opening your eyes and seeing the 20th floor, and thinking “Hey, I’m at the 20th floor, I guess I’m OK”.

The DFL has spent the state into debt.

Minnesota passed a humungous budget in the last session. To make that possible, they drew from other funds well outside of general funds, such as special revenue funds and money from the federal government.

For Health and Human Services spending, for example, lawmakers loosened eligibility and working requirements for cash assistance programs. The cost of these changes — which is about $50 million — is currently being funded by federal TANF dollars until the 2027 fiscal year.

And it’s actually much worse than that:

Once the state starts paying for these with state dollars in 2028, spending will go up. And if current events are any indication, the cost of these new changes will likely have blown past $50 million by then.

Additionally, lawmakers also allocated over $2 billion in extra funding to Medicaid. Until 2027, over half of the money will come from the Health Care Access Fund (HCAF) — a special revenue fund that has historically been used for MinnesotaCare. If at any point in the future, HCAF cannot sustain this new Medicaid spending, it will have to be shifted to the general fund.

And, go figure – the economically-illiterate DFL have killed a bunch of the golden geese (aka ripe suck citizens) that usually pay for DFL gigantism:

For one, Minnesota heavily relies on income taxation. But our income tax system is highly progressive. So, the state disproportionately relies on a small portion of the state’s high-earning individuals, which is in itself a problem.

Unfortunately, this problem was made worse last session, when lawmakers passed targeted “tax cuts” that have eliminated or reduced income tax liability for select taxpayers, such as social security income recipients and low-income parents with children. This has narrowed the individual income tax base even further.

And let’s not forget that high-income earners have already been fleeing Minnesota and going to low-tax states like Florida.

The recent changes to the tax system do not just narrow the income tax base, however. According to MCFE, these targeted tax cuts and tax redesigns have substituted less volatile sources of income tax revenue — such as salaries and social security — with the most volatile sources — such as corporate income — putting the state further in a precarious position.

I”m not in on the DFL’s planning, but I suspect it involves reliance on two things:

• Hoping the Biden Administration convincing the Fed to keep interest rates low (through the election, anyway) convinces enough gullible voters that the ecomony is just great, and
• Sending out an endless diet (as it were) of photos of Peggy Flanagan feeding Tim Walz donuts and corn dogs.

After all, that [2] is what got them through 2022.

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[1] Which was a bit of a mirage, to be honest – made up of limited-time Federal stimulus money and taxation of economic activity spurred by other government-stimulated spending.

[2] Well, and that whole Roe V.Wade thing, of course.