Minnesota’s Projected Budget Surplus Rises to $17.6 Billion – Duluth News Tribune

ST. PAUL – Minnesota’s historic fiscal surplus continues to grow, reaching $17.6 billion, according to state forecasts released Tuesday.

It’s a record that comes after a year of historic surplus forecasts and nearly a decade in which the Minnesota government ran a surplus. Last December, the state reported a $7.7 billion surplus, which had grown to an expected $9.25 billion by February.

Minnesota Gov. Tim Walz told reporters immediately after a presentation of the state budget office’s projections that the growing surplus means the state can invest more in education, childcare and infrastructure, and make direct payments to residents.

“The unique opportunity we have to make Minnesota an even better and fairer and more inclusive and prosperous state is here. And the opportunity to work together in the legislature to do that,” Walz said, later adding, “Now is the time to cut costs for families, now is the time to cut back and put some money back in your pocket.” “

Budget forecasts by Management and Treasury departments do not take inflation into account, and this year’s record inflation rates, not seen in almost 40 years, could eat away at the actual surplus.

Management and Budget Commissioner Jim Schowalter told reporters about $12 billion of the projected surplus can more or less be expected at this point, and about $6 billion is ahead. Inflation will likely reduce the overall surplus by $1.5 billion, he said.

Headwinds that the budget department expects and includes in its forecasts include a mild recession between January and September 2023.

The Minnesota Department of Management and Budget said strong collections and lower-than-projected spending contributed to the 2022-2023 surplus.“Economic headwinds” could slow growth in the coming year, the department said, while healthy earnings are forecast to remain in 2024-2025.

Democratic Gov. Tim Walz, the leadership of the DFL House of Representatives and the Republican Senate majority failed to agree on how to use the existing surplus before the end of the 2022 session, leaving billions of dollars on the table. Negotiations between the governor and Legislature leaders over a plan to use most of the surplus for tax breaks, education and law enforcement broke down in June.

Now that the Democratic-Farmer-Labor Party has won control of the Senate in November’s election, it will have significant control over how the state uses its vast surplus. The legislature will meet again on January 3rd.

The minority Republican leadership in the Legislature said the growing surplus was a sign the state government was doing well and called for long-term tax breaks.

“What we don’t need is this Democrat-controlled administration to create massive increases in government spending — and guarantee higher taxes for Minnesota’s families and businesses,” said incoming Senate Minority Leader Mark Johnson, R-East Grand Forks. “The last time Democrats had one-party control, we saw a plethora of new government programs that required billions in permanent tax and fee increases.”

DFL priorities in the upcoming session include paid family and sick leave and increasing funding for education. Walz has signaled in the past that he wants to return some of the surplus to Minnesotans in the form of direct payments, though the plan never got a foothold in the legislature.

Tuesday’s surplus forecast comes when the Budget Department releases its forecast ahead of the upcoming fiscal year in the Minnesota Legislature. There will be a second estimate from the ministry in February.

This is an evolving story and will be updated.


Leave a Comment