State Senator Rich Draheim said yesterday that he is not surprised at the size of the $7.7 billion state budget surplus. In fact, he said, he had
predicted a surplus for the coming year that he thought would be between $7 and $8 billion. He was right, but he is not happy about that.
Draheim said there are several factors contributing to the surplus. The amount of money the state has received from the federal government in three separate Covid bills is in the billions of dollars. State tax revenue is up quite a bit as well, he said. With the highest inflation rate the country has seen in forty years, the state is collecting more on sales tax revenue, which is also bolstered, he said, by the state collecting tax on online purchases as well.
The Senator, who has long been a critic of government spending, believes that changes need to be made in economic policy at the state level. The state is flush with cash, he said. Every reserve fund that the state has is full, with the exception of unemployment, which he pointed out, is about $1.2 Billion dollars in the red. In his opinion, the state has enough money, and he is frustrated that the state government continues to show a surplus every year for more than a decade, even as spending is increased every year as well.
“We’ve had, year after year after year, for over a decade, of increased spending in state government. I think budget-cycle wise we’re averaging a 5-7% increase in spending every cycle. Yet we still continue to have surplus after surplus after surplus.”
As far as what the state should do with the surplus, Draheim has ideas. It is exceedingly difficult for what he called “young, hardworking families” to make the necessary adjustments to a household budget in the face of a 6.2% inflation rate, and he believes the best thing would be to refund the money to the people of Minnesota. The Senator said coming to a consensus on what to do with the surplus will be tough. In recent years, state legislators have had a more difficult time agreeing on anything when there is extra money to be distributed. Draheim said he expects this year to be no different.
Jeff Johnson’s full conversation with State Senator Rich Draheim can be heard here
District to address contracting revenues
The members of the Northfield School Board met on Monday night for the final time in 2021, with several items on the agenda, but none more important than the approval of the 2022 budget and tax levy. Superintendent of Public Schools Dr. Matt Hillmann said the tax levy this year is 1.5% less than it was last year.
Hillmann said the budget for the 2022-23 school year will be $20,009,247.48. He said the reason for the smaller budget next year is fewer students. The Northfield School District expects to see fewer students than the year before, each year for the next few years. The decline in enrollment means less money will be coming from the State of Minnesota, and therefore the budget is contracting as well.
Hillmann said the 1.5% drop in the levy means homes that are valued at $200,000 will pay 7% less on their taxes to the district than they did in 2021.
Hillmann said the district will be able to absorb the drop in revenues because of the stewardship the district has shown over many years. It has been policy for many years to keep 16% of all expenditures in reserve, which has left things in rather decent shape in the short term.
Long term, however, there are problems. According to Dr. Hillmann, the funding provided by the State of Minnesota has been not quite enough every year for going on thirty years.
“I’ve also talked to you about state funding. The [funding school districts receive from the state] hasn’t kept up with inflation in thirty years, and we certainly have seen the latest inflation index coming out of the CPI and so we know that even the historic investment that was made by the legislature last session is not even enough to keep up with almost a third of inflation this year.”
In the face of smaller enrollment, and what he called chronic underfunding, Hillmann said they will begin to develop a prioritized budget plan for the next five years. He said good fiscal management over the years will help the district to get through a rocky time like this in the short term. The next five years, he said will be about learning to live with what they have.
City, NDDC plot the future together
The City of Northfield’s 2022 budget includes the creation of a fulltime City Planner in the Community Development Department who will
focus on Downtown Northfield. Many of this person’s responsibilities will be those once held by the Executive Director of the Northfield Downtown Development Corporation. As the new year begins, the city and the NDDC are working together to find a new and different approach to their relationship.
Over the past year, the city and the NDDC have been exploring opportunities to strengthen their partnership and to better align their strategic projects and initiatives for the downtown area. When the NDDC executive director position became vacant in summer 2021, the decision was made to consider future staffing options.
The new position will take over some of the NDDC’s Main Street programming work along with the city’s existing work related to development and place making in the downtown area.
“The commitment to downtown Northfield is not going away, if anything this shift will amplify the impact both the NDDC and the City can have,” said Kathleen Holmes, president of the Northfield Downtown Development Corporation. “By streamlining this work, this position will serve as a liaison for both the NDDC and the City on matters related to downtown Northfield and bring alignment on new and existing work that touches on the Main Street’s four points of economic vitality, design, promotion and organization.”
The NDDC has a 20-plus year history of supporting downtown Northfield through sponsoring events, awarding grants, supporting public art, and providing advocacy for business owners, building owners, residents and visitors.
In the coming months, both the city and the NDDC will work together to re-define their joint projects, transition and clarify the various responsibilities of managing the Main Street program, and use the strengths each organization contributes to better serve the community.
Rich Larson is the KYMN News Director. Contact him at rich@kymnradio.net
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