January saw tax collections slide in Minnesota; budget officials not worried

Kate Haugen prepays her 2018 property taxes.
Kate Haugen writes a check to prepay her 2018 property taxes inside the Hennepin County Government Center in Minneapolis.
Evan Frost | MPR News 2017

Minnesota tax revenue slumped in January, according to a collections report released Monday on the eve of the Legislature’s new session.

The state’s tax agency took in $228 million less than expected last month, according to a Department of Minnesota Management and Budget review. That’s 9 percent below what finance officials expected.

Individual income tax and corporate tax receipts were both significantly below expectations last month and accounted for most of the reduced collections.

It now puts Minnesota $76 million — or 0.6 percent — behind its tax pace for the 2020 fiscal year.

MMB Commissioner Myron Frans said the dip is no cause for concern. He said the drop likely results from decisions by taxpayers about when to send in a check.

“We thought people would follow the normal practice and tend to pay their estimated payments at the end of the year rather than wait until April 15th,” Frans said. “That’s what we think this is: It’s a timing issue. We’re not going to change our forecast because of this.”

Frans expects the money to materialize between now and April.

Officials always caution about reading too much into the monthly reports because timing of payments and other one-time factors can throw off the numbers. The report doesn’t examine spending patterns or make long-term predictions.

A comprehensive state economic forecast is due the last week of February. That report will guide the Legislature during upcoming session deliberations.

In early December, MMB said there was a projected $1.3 billion surplus at lawmakers’ disposal.

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