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New Forecast Puts MN Budget Surplus at $1.08 Billion

PHOTO: A new budget forecast has Minnesota looking at a $1.08-billion surplus for this two-year-budget cycle. Photo credit: Fibonacci Blue
PHOTO: A new budget forecast has Minnesota looking at a $1.08-billion surplus for this two-year-budget cycle. Photo credit: Fibonacci Blue
December 6, 2013

ST. PAUL, Minn. – After struggling with massive budget deficits for what seems like years on end, it appears the state has regained its financial footing.

Minnesota Management and Budget has released its latest forecast and Commissioner Jim Schowalter says higher revenues and lower spending have led to a surplus of just over $1 billion.

"This forecast shouldn't be mistaken for money in the bank,” he cautions. “We're still only in the fifth month of a two-year budget, but one thing is clear – with this forecast, we will have completely paid back our school shifts and replenished our reserves."

Schowalter says the school funding shifts will be the first to be repaid, as required by state law. Once that and other obligations are met, the state budget surplus would still top $800 million.

With the new forecast, Minnesota Republicans are looking to retract some recent tax increases, which they say were clearly unnecessary.

DFL State Sen. Kathy Sheran of Mankato says tax relief is something the Legislature will look at in the 2014 session, but she also notes that now is not a time to make any radical changes.

"We've had too many years of fluctuating budgetary processes,” she stresses. “So I don't think that when we have good news like this, that we should rush to making big spending or big tax changes until we are certain that what we're seeing in this forecast is actually reflecting an improved economy."

In addition to higher taxes, previous state budget gaps were also filled by spending cuts. Sheran notes that Health and Human Services took the brunt, so she believes the surplus could help some of those programs.

"The disability community, for example, and those who work with them have not received wage increases for a long, long period of time,” she points out. “So, that would be a place that would have some appeal to me."

Gov. Mark Dayton says he'll wait until the next forecast in February before submitting his plan to the Legislature, but his top priorities include eliminating several new business-to-business taxes, increasing the working family tax credit, and a tax cut for middle-income Minnesotans.

John Michaelson, Public News Service - MN