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A more complete state budget forecast, which will include projections on revenues and expenditures, will be released in early December.
(Published Nov 15, 2012)
Minnesota Management and Budget released the monthly tax collection report for the state last week. Since the 2008-2009 recession, the monthly state revenue collections reports have become a closely watched snapshot of the impact of economic activity on the state’s budget.
According to the report, preliminary estimates for October show general fund receipts totaling $1.416 billion, which is $56.5 million (4.2 percent) more than forecast in February, when the last full state budget forecast was released (see table below). For the 2013 fiscal year, which began on July 1, 2012, receipts are now $5.165 billion, which is $201.2 million (4.1 percent) above forecast.
The report cautions that all the monthly collection results are preliminary and subject to revision and that monthly revenue variances should be interpreted with great caution.
The next state budget forecast will be released on Dec. 5. That forecast will include estimated revenues and expenditures for the balance of the current fiscal year (FY) 2012-2013 biennium, which will end on June 30, 2013, as well as projections for the upcoming FY 2014-2015 biennium.
Based on the February 2012 forecast, as updated by actions of the 2012 Legislature, the state is currently projected to have an FY 2014-2015 deficit of $1.05 billion. The recent stronger-than-projected revenue collections suggest, but do not guarantee, that the upcoming forecast will reflect a smaller FY 2014-2015 deficit.
In addition, factors such as the potential expiration of lower federal income and payroll tax rates, as well as the potential for significant reductions in federal expenditure programs that could result under sequestration, could have a negative impact on the state’s economy and the state’s revenue collections. At this time, it is unclear how the state budget forecast will treat these uncertainties.
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Contact Gary Carlson
(651) 281-1255 or (800) 925-1122