Minn. to get handle on size of budget surplus
ST. PAUL — Political gridlock might have paid off for a change in Minnesota.
Finance officials are releasing a highly anticipated economic forecast today, which will tell lawmakers how much money has piled up in state coffers and how much more is expected to materialize from tax collections in coming months.
A Legislature with split-party control and Democratic Gov. Mark Dayton failed to reach accord on some substantial initiatives last spring, meaning $865 million went unspent.
The forced thriftiness combined with stronger-than-expected tax collections should mean a projected budget surplus well above $1 billion, though lawmakers won’t be able to touch all of it.
Here are some things to keep in mind ahead of the report’s release:
The exhaustive, twice-yearly reports examine how the state is spending and generating money, looking both to the past and into the future to provide budget estimates.
When lawmakers adopted a final budget in June, they didn’t spend every penny available largely because they couldn’t agree on a tax-cut package and a long-term transportation spending plan.
In the last four months alone, state tax collectors have pulled in $140 million more than they were counting on. Still, there are some areas of concern: Minnesota’s mining industry has hit a rough patch and a sputtering stock market could translate into smaller capital gains tax collections down the road.
Even if the new report shows a surplus, some won’t be available to policymakers.
After grappling with a string of deficits, lawmakers decided in 2014 to force automatic set-asides for the budget reserve with the hope that saving now will help cushion any blow if tax revenue drops off. One-third of any surplus would be shaved off the top and put into a rainy-day account.
Minnesota currently has reserve and cash-flow accounts with a combined $1.3 billion. State finance officials have a goal of building that above $2 billion.
Groups with spending plans before lawmakers are already eyeing up the pot.
Advocates for caregivers who serve physically and mentally disabled clients made a pitch this week for $90 million, which they say will help foster higher quality care by making the pay for home-based services more attractive.
Transportation coalitions are highlighting backlogs in road projects as they petition for a slice of the surplus.
Education-oriented organizations intend to angle for more money, including those that have rallied behind Gov. Mark Dayton’s call for state-paid universal preschool.
Also in the mix are business interests and others who want tax cuts.
This won’t be the last forecast that comes in before lawmakers head back to St. Paul.
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