State finance officials say Minnesota has a $1.2 billion projected budget surplus in the current two-year budget cycle. That’s a $408 million increase over the last forecast released in December.
The improvement is due entirely to better revenues driven by a stronger economy, Minnesota Management and Budget Commissioner Jim Schowalter said Friday as he released the newest state economic and budget forecast.
“It’s really a pretty simple story to explain because what’s happening is we’re seeing improved national economic performance, diminished uncertainty about national fiscal policy as well as an excellent local economy," he said. "All of this adds up to improvement in our state revenues as well as state jobs and incomes.”
Gov. Mark Dayton and DFL legislative leaders will now have to decide how they want to spend the money. Dayton and House Democrats are pushing for tax cuts as high as $600 million. Some Senate Democrats, however, say they want to see much of the money put in budget reserves.
Dayton on Friday said he'll send his supplemental budget ideas to the Legislature next week.
The improved financial picture shows "there is a positive role for government to play in our state’s economic progress" and the next step is to decide "how best to allocate this biennium’s $1.2 billion surplus," the governor said in a statement. "The individual and business tax cuts in the House tax bill are a very good start."
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Today’s forecast comes less than a year after Dayton and the DFL-controlled Legislature passed $2.1 billion in tax hikes. Those tax increases are showing no signs of slowing the state’s budget outlook, said State Economist Laura Kalambokidis.
“The story about the Minnesota economy at the moment is that we’re continuing to make solid gains and so we’re growing and we’re growing at approximately the same rate as we were last year," she said. "If the tax changes of last year had a dramatic change on the economy, we’re not seeing it in the data right now.”
Click here for the full set of documents connected to the new economic and budget forecast.