State Budget Forecast Projects Positive Balance Of $1.6 billion

SAINT PAUL, MN —Minnesota Management and Budget (MMB) projected a $1.6 billion surplus for the next two-year cycle when it released its most recent state-budget forecast on Friday.

Last November, MBB had predicted a $1.3 billion deficit for the latest budget cycle. However, in a statement Friday, MBB said a higher revenue forecast, lower state spending and an increased surplus for the current fiscal year were responsible for its latest forecast.

The forecast is available online.

In a statement, the MBB said Minnesota's budget outlook was significantly better for this biennium and the next due to an improved U.S. economic outlook, which has been bolstered by large federal actions that have emerged since November and were not incorporated into the earlier projections.

Though there is no anticipated shortfall for the fiscal years 2022 and 2023, the MBB warned "the economic outlook has not been spread equally as unemployment continues to disproportionately impact lower-wage workers."

According to the Star Tribune, the latest forecast sets the stage for months of budget negotiations at the State Capitol and will be become part of an ongoing political battle over taxes.

Gov. Tim Walz considered November's budget projections last month when he proposed a $52.4 billion budget plan, which included increased taxes on top earners and corporations, additional spending on education and assistance for some lower-income families.

Walz is expected to adjust his proposal based on the latest forecast. The state House and Senate also will offer their big picture budget numbers in late March.

Another key variable in the budget picture will be money from President Joe Biden's proposed $1.9 trillion COVID relief package.

According to the Star Tribune, Democratic leaders on Thursday called for more state dollars for education and struggling families and said Minnesota should increase taxes on the wealthy and on businesses.

"We need an adequate source of revenue in order to support the kind of Minnesota we want to create. It doesn't happen for free," said House Majority Leader Ryan Winkler (D-Golden Valley).

Meanwhile, Rep. Greg Davids (R-Preston) said Democrats have committed to tax hikes regardless of the budget projections, but Republicans plan to prevent these increases from happening.

"Thankfully, Republicans will be looking out for Minnesota and their wallets, and these tax hikes stand zero chance of becoming law," said Davids, who is the Republican lead on the Tax Committee.

Read more in the Star Tribune.