Our View: Keep hands off reserve funds
Winona Daily News Editorial, April 8, 2012 –
Here’s a simple quiz called Name That Political Party.
One party wants to use a quick fix and tap a rainy-day fund to pay down debt that never should have occurred — a $2.4 billion IOU that a state has handed to its local schools.
The other party doesn’t want to deplete the rainy-day fund and its governor vetoes the move.
Is the governor:
c) Out of his mind
d) Taking the prudent, fiscally conservative approach
If you answered b and d, you’re correct – and so is Minnesota Gov. Mark Dayton.
The state of Minnesota has shamefully continued to pass along its financial problems to local schools without even the courtesy of yelling, “Look out below!”
The IOU was nearly $2 billion entering last year, and it became $770 million worse in the so-called budget compromise between the governor and the Republicans who control the Legislature.
So, how can Minnesota get out of the hole that it threw our schools into?
Rather than closing tax loopholes or considering fee increases, Republicans in both the House and Senate passed measures to take $430 million out of reserves.
That would have left the state’s reserve fund at $277 million — still a lot of money, right?
Well, it’s not nearly the amount that state budget officials say we need to keep on hand — $1.3 billion.
Dayton has proposed closing corporate tax loopholes on foreign operations. In his letter to House Speaker Kurt Zellers accompanying his veto, Dayton wrote: “Unfortunately, the legislative majority decided that protecting large corporations’ tax breaks for operating overseas was more important than paying back our schools responsibly.”
Zellers cried foul and accused Dayton of political gamesmanship.
But Dayton is correct to caution that putting the state at risk of additional borrowing to pay for money it already has borrowed from local schools doesn’t make sense.
“The same people must pay off either school debt or state debt: the people of Minnesota,” Dayton wrote.
And the people of Minnesota are smart enough to understand that whether the money comes out of your left pocket to pay the state taxes or your right pocket to pay for local schools, cities and counties, it’s still coming out of your pocket.
Dayton’s conservative approach to borrowing from cash reserves seems downright Republican – and the fiscally responsible thing to do for Minnesotans.