Minnesota lawmakers will face a $1.1 billion budget deficit for the next budget cycle, according to the state’s official forecast released Wednesday.
The estimate shows a $1.3 billion surplus for the remainder of this biennium, which will be used to pay back part of the $2.4 billion borrowed from schools to balance the current budget.
The projected shortfall, relatively modest compared to recent deficits, could change dramatically, though, if federal negotiators are unable to reach a deal to avoid the nation’s “fiscal cliff,” which could trigger massive tax increases and spending cuts and affect state economies.
DFL Gov. Mark Dayton, who worked with a divided Legislature to eliminate a $5 billion deficit in the first year of his term, will release his budget by Jan. 22, just weeks after lawmakers return to St. Paul for the legislative session. This time, the DFL will be in control of both houses.
Dayton campaigned on tax increases for the wealthiest Minnesotans during his gubernatorial bids, and at least two unions — key DFL constituencies — have called for revenue hikes since the state released the forecast this morning.
State officials will release more information around midday.