Minnesota's Economic And Budget Outlook Improves: $641M Budget Surplus Projected
MINNEAPOLIS (WCCO) -- Minnesota Management and Budget (MMB) officials on Tuesday say the state's economic and budget outlook has improved since May, and a $641 million budget surplus is now projected.
In May, the state projected a $2.4 billion deficit. MMB credits higher general fund revenues and lower expected spending for December's more positive outlook.
The improved budget outlook continues into the next fiscal year, but the state is expecting a $1.27 billion budgetary shortfall for the fiscal year 2022-2023.
In the fine lines of the budget outlook there are bright spots. Sales tax revenues increased because of spending in areas like furniture, electronics and other household goods.
But even in the good are warning signs. State spending on education was down because 12,000 fewer children enrolled in public schools.
Britta Reitan is the executive budget coordinator for the Minnesota Office of Management and Budget.
"We are anticipating pupils to return, but not all in the next year," Reitan said.
State income tax revenue was stronger than expected because it was mostly lower income people who lost jobs.
"The impact has been disproportionately on wage earners, especially those on the lower end of the socioeconomic scale," Walz said. "Communities of color, Native communities."
State spending for medical assistance dropped because low-income recipients put off $270 million in expected procedures.
For Democrats and the governor, the surplus means quick action on a relief package for small businesses, including restaurants.
"I still think there's every reasonable opportunity that we get this thing done in the next week or so," Walz said.
But action is not expected before the Dec. 14 special session, and Republicans are urging caution, including Senate Majority Leader Paul Gazelka.
"Right now we have a surplus and we don't need to raise taxes period, we don't need to do that. And we do need to tighten our belt," Gazelka said.
Republican Rep. Pat Garofalo of Farmington echoed that sentiment.
"We're in favor of small business assistance. We don't need anything attached to that to pass it," Garofalo said.
Even though state budget officials warn of the $1.3 billion budget shortfall, they agree that forecast could also change. The only certainty continues to be uncertainty in the continuing face of this pandemic.
Discussions on a possible relief package for small business between the governor and both Republican and DFL lawmakers are ongoing.
