Normally, $100 million would be considered quite a chunk of change. But, in the context of Minnesota\u2019s projected budget surplus, it seems the proverbial drop in the bucket.<\/p>\n\n\n\n
Minnesota Management and Budget officials revealed the February budget forecast<\/a> Monday, and the numbers aren\u2019t that different from what was projected in November. Then, it was $17.6 billion. Now, it\u2019s expected to be in the area of $17.5 billion for the next biennium, which begins July 1, 2023.<\/p>\n\n\n\n If it weren\u2019t for a new state law<\/a> that requires inflation to be accounted for in both sides of budget projections, the surplus would be even larger, for inflation is expected to remove $1.4 billion from the state\u2019s bottom line.<\/p>\n\n\n\n \u201cThis is amazingly close to what we predicted in our last forecast,\u201d said Jim Schowalter, the commissioner of Minnesota Management and Budget. \u201cIn December, I suggested that the ups and downs of the state budget were starting to get a little less extreme. I\u2019m happy to say that this forecast confirms that expectation. The economy is stable and the budget outlook is very good.\u201d<\/p>\n\n\n\n A lot of the optimism seems to stem from a rosier national outlook. State Economist Laura Kalambokidis attributed much of the good news to improvement in the U.S. economic outlook, with lower inflation and a milder recession than previously expected.<\/p>\n\n\n\n The state\u2019s chief macroeconomic consultant is a firm called IHS, and it expects real gross domestic product growth in the U.S. to average 1.8% annually from 2024 through 2027, a slight rise from the 1.7% average annual rate projected in the November forecast.<\/p>\n\n\n\n \u201cIHS expects a mild recession,\u201d Kalambokidis said. \u201cA recovery is expected to begin in the third quarter of this year.\u201d<\/p>\n\n\n\n She added that IHS expects inflation to slow this year while the Federal Reserve institutes two more interest rate increases to go with the seven last year and the one so far in 2023.<\/p>\n\n\n\n Taking things down to a statewide level, most of the projected surplus is left over from the current biennium. But revenues from income and corporate franchise taxes are up over previous estimates. Looking further down the road, revenues are forecast to exceed state spending through fiscal year 2027.<\/p>\n\n\n\n Of the projected $17.5 billion surplus, $12.5 billion could be characterized as \u201cone-time money,\u201d while $5 billion is part of the state\u2019s structural balance, i.e. money available for recurring budget outlays.<\/p>\n\n\n\n But Kalambokidis warned of possible changes that could alter the state economy\u2019s path. Inflation could rise more than expected, perhaps inspiring the Federal Reserve to raise interest rates even further. There could be changes in federal monetary policy, as well as volatility in corporate profits and capital gains. And the debt ceiling impasse in Congress could cause a much deeper recession if the U.S. defaults on its financial obligations.<\/p>\n\n\n\n \u201cWe\u2019ll have to be careful,\u201d Schowalter said. \u201cBut, looking forward, we still see a rough parity between our revenue growth and our spending growth. It\u2019s a great position for the state to be in.\u201d<\/p>\n\n\n\n \u201cThis is good news for Minnesotans,\u201d said Gov. Tim Walz<\/a>. \u201cHaving a highly educated workforce has allowed us to create an economy that allowed us to weather some of the most challenging times in our nation\u2019s history over the last three years.\u201d<\/p>\n\n\n\n The governor pointed to annual job growth in the state as being one of the most important facets of the forecast.<\/p>\n\n\n\n House Speaker Melissa Hortman<\/a> (DFL-Brooklyn Park) spoke to how she sees her caucus responding to the forecast.<\/p>\n\n\n\n \u201cHouse DFLers remain focused on the issues Minnesotans across the state value and care about: investing in public education, making health care more affordable, and building an economy that works better for everyone,\u201d she said in a statement<\/a>. \u201cMinnesota is a great state, but it can be even better, and our state\u2019s prosperity can and should reach more people.\u201d<\/p>\n\n\n\n In her statement<\/a> on the forecast, House Minority Leader Lisa Demuth<\/a> (R-Cold Spring) pointed to its inclusion of inflation.<\/p>\n\n\n\n \u201cWhile inflation hasn\u2019t hurt government tax revenue, it has significantly hurt Minnesotans\u2019 buying power,\u201d she said. \u201cIt\u2019s time to get serious about giving the surplus back to the taxpayers so they can afford their lives in the face of historic inflation driving up the cost of basic necessities.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Normally, $100 million would be considered quite a chunk of change. But, in the context of Minnesota\u2019s projected budget surplus, it seems the proverbial drop in the bucket. Minnesota Management and Budget officials revealed the February budget forecast Monday, and the numbers aren\u2019t that different from what was projected in November. Then, it was $17.6 billion. Now, […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"off","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[1721,1722,1720],"class_list":["post-2702","post","type-post","status-publish","format-standard","hentry","category-news","tag-jim-schowalter","tag-laura-kalambokidis","tag-minnesota-management-and-budget-officials","et-doesnt-have-format-content","et_post_format-et-post-format-standard"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/posts\/2702","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/comments?post=2702"}],"version-history":[{"count":1,"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/posts\/2702\/revisions"}],"predecessor-version":[{"id":2703,"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/posts\/2702\/revisions\/2703"}],"wp:attachment":[{"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/media?parent=2702"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/categories?post=2702"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/apexsamplework.com\/insightnews\/wp-json\/wp\/v2\/tags?post=2702"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}