Minnesota’s economic and budget outlook have improved since May. The November forecast, released today, shows a markedly better situation with a projected surplus of $641 million for the fiscal biennium ending on June 30.
In May, the Minnesota Management & Budget (MMB) projected a $5 billion shortfall of revenue into the state’s general fund. At the time, Minnesota was on the front end of the COVID-19 pandemic and the planning estimates reflected worst case scenarios.
Looking Forward
The improved budget outlook continues into fiscal years 2022-23, but a $1.273 billion budgetary shortfall remains for that biennium. The FY 2022-23 figure doesn’t include any inflationary assumptions for state spending. However, the state has a healthy budget reserve of roughly $2 billion and be available for the next legislature to use to help balance the next budget.
The turnaround toward positive budget news is in part due to federal CARES Act funds flowing through the state, medical and local government systems. State expenditures for Health & Human Services programs are actually down $900 million in the current budget cycle.
Impact on E-12 Spending
E-12 spending is projected to be down $118 million as the budget forecast shows nearly 12,600 students dropping from district pupil counts.
A second federal aid package could be coming as Congress works through a lame-duck period before the holidays and any new federal funds could help boost state and local government budgets. The ongoing spike in COVID cases and shutdowns across the state have also contributed to uncertainty. However, the good news is that the state’s economy is trending in the right direction.
