The November Forecast is first look at the state’s biennial budget and will set the stage for the 2014 legislative session.
(Published Dec 9, 2013)
Laura Kalambokidis, the new state economist, and Minnesota Management and Budget (MMB) Commissioner Jim Schowalter unveiled the November update to the state budget forecast on Dec. 5. The news is positive, with state revenues now expected to exceed expenditures for the remaining 19 months of the fiscal year (FY) 2014-15 biennium by $1.086 billion.
The improvement in the forecast was attributed to a projected increase in state revenues for the balance of the FY 2014-2015 biennium of $787 million and a decrease in projected expenditures of $247 million. The longer-range projections for the FY 2016-17 biennium continue the positive trend, with the state budget showing a structural surplus of nearly $2.2 billion.
Commissioner Schowalter indicated that this is the first of four state budget forecasts for the FY 2014-15 biennium, and he cautioned that the forecast was not yet “money in the bank.” With Minnesota’s tax structure, Schowalter stated that it is not uncommon that subsequent forecasts can show substantial swings in forecasted revenues, although he did not suggest that there is any immediate reason to be concerned that future forecasts would show a worsening budget situation.
Current law requires any forecast balance be first used to repay the remaining $246 million in K-12 education finance shifts that were used to balance previous state budget deficits. In addition, current law requires that the next $15 million be transferred to the state airports fund, restoring money originally borrowed from that fund in 2008. After these repayments, the remaining positive state general fund balance is $825 million.
Immediately after the budget forecast presentation, Gov. Dayton indicated that if subsequent forecasts continue to project a similar surplus, he would suggest that the Legislature use the surplus to eliminate several of the business-to-business taxes enacted in 2013 and to provide middle class tax relief.
The state’s November Forecast provides the governor and legislators with an early idea of the status of the state budget. However, the upcoming February 2014 Forecast will provide the final 2014 session estimates of state general fund revenues and expenditures and will be used as the baseline for 2014 legislative budget adjustments.
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