The updated state budget forecast released today reveals a slight retraction in the $1.2 billion surplus initially projected as of December to $900 million, according to Minnesota Management and Budget.
Legislative leaders now have to grapple with the budget news as they head into session on March 8. The competition for tax cuts, transportation spending and early learning funding just got more fierce. View the budget & economic forecast details.
Why a reduction?
The reduction stems from lower projected tax revenues through the rest of the current two-year budget period, which ends on June 30, 2017. Spending for this period is down, thanks to the Feds for picking up more Medicaid expenditures in the HHS arena.
The budget forecast also shows a shrinking surplus for the ‘tails’ or fiscal years 2018 and 2019. The December forecast revealed a $2 billion surplus for the tails, but today’s figures show a $1.1 billion surplus.
Keep in mind that an across-the-board 1.9% annual inflationary increase for the next biennium would cost $1.7 billion.