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The first meeting of the House Ways and Means Committee included a presentation from the State Economist, Tom Stinson.
(Published Jan 14, 2013)
The first meeting of the House Ways and Means Committee quickly went from an around-the-table introduction of members to a detailed discussion with the commissioner of the Minnesota Department of Management and Budget (MMB) Jim Schowalter, Budget Director Margaret Kelly and state economist Tom Stinson.
Much of the discussion was centered on the MMB Economic update report issued last week highlighting state revenue collections for the months of November and December. That report indicated that the state revenue collections had exceeded the amount forecasted in the December Budget forecast by $114 million.
State Economist Tom Stinson told the committee that $114 million increase in revenues does not necessarily indicate that the economy is stronger than previously projected. His suggested that with taxpayer uncertainty surrounding the federal fiscal cliff and possibility of tax increases in 2013, some taxpayers appear to have accelerated capital gains and other income into 2012 to avoid possible tax increases.
Stinson also commented that if Congress is not able to reach agreement on increasing the federal debt limit, the consequences for the economy and therefore the state budget could be more pronounced than the fiscal cliff impacts.
The presentation also highlighted the current projected $1.1 billion state budget deficit for the FY2014-15 biennium. Commissioner Showalter stated that some of the stronger-than-expected revenue increases that occurred during the current biennium are not projected to continue into the FY2014-15 biennium. He also highlighted the fact that the 2011 special session budget compromise for FY 2012-13 included several one-time budget actions that now contribute to the projected FY2014-15 shortfall.
In his concluding comments, Stinson told the committee that the next full state budget forecast will be released on February 28.
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