Heading into the new Legislative session at the start of the new year, we can expect that things are going to be different. The DFL is in control of the House, Senate, and Governor’s office for the first time since 1990 – and comes in with a lot of pent-up demand from their own interest groups. Attention tends to focus on social issues such as universal marriage, but we predict here that most of the time will be focused on the budget.
As discussed here, there is a structural imbalance of $1B per year obscured by a 2002 law that restricts how the forecasters are allowed to figure the state’s budget (though this is not without controversy – see the comments). We can predict that this will be plugged primarily by flattening out tax rates and making the highest earners pay a similar rate to most of the state, 12.1%-12.3% of defined, taxable income. And we have determined that, on balance, Minnesota is a remarkably average state in terms of its total size (represented by combined state plus local income) and net tax burden.
But what about expenditures? How does Minnesota compare with the rest of the nation?