State budget surplus grows to $1.5B
The February budget and economic forecast, released by Minnesota Management and Budget (MMB), shows the state budget surplus for FY 2020-21 has grown to $1.5 billion — $181 million higher than the previous forecast in November.
MMB Commissioner Myron Frans said this forecast is stable, but he also warned of a slowdown coming next year. He strongly recommended restoring the budget reserves with $491 million of the surplus to secure the state’s safety net, and to include inflation as a factor in the next forecast.
There are many outside factors that pose a risk to the surplus forecast including a change in consumer confidence, financial market volatility, trade policy uncertainty, prolonged and widespread virus outbreak (such as the coronavirus), and more time until the end of the biennium for variation.
Following the release, Governor Tim Walz told the press that he is pleased with this stable forecast, but wants to remain cautious. He also voiced support for a large bonding bill.
The DFL Senate and House leadership stated that this surplus is actually a deficit when accounting for inflation and upcoming spending. They noted that it’s important to bring more people into the state to increase the number of workers for the amount of jobs available to maintain a strong economy.
The GOP responded to the new forecast by stating that they would like to cut taxes with this surplus by $1 billion by fully exempting social security, relieving taxes for small businesses and agriculture, and lowering the lowest income tax level.