By Pat Kessler

MINNEAPOLIS (WCCO) — State finance officials say federal tax cuts this year helped spark a burst of economic activity.

But they warn: This red-hot economy could be slowing down.

The big surplus gives the new Democratic Gov.-elect Tim Walz breathing room for the spending programs he promised on the campaign trail — education, health care and roads — and he’s not backing off.

“Honest discussion about what Minnesota wants to see out of government and in their state,” Walz said. “What it takes to put those policies in place, and how do we ensure they are stable — in good times and bad?”

Minnesota has had 99 straight months of job growth. The state has also had near-record job low unemployment and more job vacancies than people to fill them.

But economists still warn: A trade war with China could slow it all down.

The new Democratic House speaker says those big, flashy surplus numbers are deceptive.

Rep. Melissa Hortman is urging extreme spending caution.

“We will invest in Minnesotans. We will invest in Minnesota. And this positive forecast allows us to do that,” Hortman said. “But we have to do that in a responsible and sustainable way.”

Democrats are promising long-term spending on roads and bridges, including a possible gas tax hike to pay for it. But Republicans say a surplus makes that unnecessary, and the legislature should be passing tax cuts.

“We do feel like folds are happy with the economy,” said outgoing House Speaker Rep. Kurt Daudt. “They are happy with the economic growth, but we also know if we start increasing taxes on Minnesotans at a time we don’t need to because we have a surplus, that’s going to hurt Minnesota.”

Pat Kessler