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Minnesota’s budget surplus shrinks to $900 million

Copyright Minnesota House of Representatives
Minnesota State Capitol

Minnesota lawmakers are already tempering expectations. 

On Friday, Minnesota budget officials downgraded the state’s projected surplus for the next two years to $900 million, more than $300 million lower than they predicted in November. While Minnesota’s economy is still doing “quite well,” the global economy has declined since then, Minnesota Management and Budget Commissioner Myron Frans said. That’s led to a $427 million dip in expected revenue collections for 2016-2017, even if overall spending is down by $129 million. 

The February budget forecast sets the table for the 2016 legislative session, which convenes on March 8.

Last session, Democrats and Republicans clashed on passing a tax-cut proposal and long-term spending plan for transportation, leaving $865 million on the bottom line for 2016. That grew to $1.2 billion in the November forecast, but the revised number puts legislators almost back to where they left off.

“It feels like about where we were in June when we went home,” Senate Majority Leader Tom Bakk said Friday. 

Their ideas haven’t changed much since June, either.

DFL Gov. Mark Dayton and legislative Democrats are still calling for some kind of long-term transportation funding package, in addition to spending on education this session, while Republicans have promised to pursue tax cuts again.

“The real losses in this report are from people who get up and go to work everyday,” Republican House Speaker Kurt Daudt said. 

Coming to an agreement will be all the more difficult in a short, 11-week session followed by a major election cycle for legislators. The smaller total surplus means a lot of things will probably get left out of a final deal, Bakk said, including major tax cuts and Senate DFL priorities like an increase in Local Government Aid. 

“I think everything got a little harder [today],” Bakk said. 

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Comments (2)

  1. Submitted by Tom Anderson on 02/26/2016 - 09:42 pm.

    Prayers are answered

    Some of the legislative leadership had commented on how it was harder to deal with a surplus rather than a deficit. Things are getting easier for the upcoming session every day.

  2. Submitted by Dennis Wagner on 02/28/2016 - 03:49 pm.

    Lost opportunity

    Gas was ~ $1.33-1.39 and the GOP could not see their way to a users fee for transportation, any economist could tell you that gas has an elasticity curve, the higher the price, the lower the usage, price went up ~ 30% this last week or so. A 10-15 cent user fee/gallon would have already been lost in the noise.

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