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Minnesota officials forecast $188 million budget deficit

Minnesota State Capitol
MinnPost photo by Greta Kaul
Legislators don’t convene until Feb. 20, and an updated forecast will be released shortly thereafter. But the early number offers a preview of what lawmakers can expect when they come back.

Minnesota will have a $188 million budget deficit on the table as lawmakers head back to St. Paul for the 2018 session.

State budget officials and economists released the November economic forecast Tuesday morning, showing “significant risk” in the budget for the final year of the 2018 and 2019 biennium. Budget officials are predicting an even larger shortfall in 2020 and 2021, with a $586 million deficit projected for that budget cycle.

“Deficits are due to a reduced U.S. economic growth forecast and impacts of enacted legislation during the 2017 session,” read a brief statement from Minnesota Management and Budget, the agency that releases economic forecasts. “Unknowns in federal policy and the current economic expansion, one of the longest in U.S. history, create significant risk for this forecast.”

Legislators don’t convene until Feb. 20, and an updated forecast will be released shortly thereafter. But the early number offers a preview of what lawmakers can expect when they come back. It's the first projected deficit in the state since 2013. 

The deficit will have to be addressed on top of other unfinished business from the 2017 session. One of the first things legislators are likely to tackle when they return is passing a roughly $130 million budget for the House and the Senate, which Gov. Mark Dayton vetoed in May during an ongoing budget dispute. Tensions between the Republican-controlled Legislature and DFL governor could spill into to the 2018 session. It’s Dayton’s final year in office.

Top budget officials, legislative leaders and the governor will respond to the new forecast Tuesday afternoon.

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Comments (13)

Economic conundrum

Gosh, how can a budget deficit even be possible when Congressional Republicans, with the support, I presume, of Chambers of Commerce all over Minnesota, have assured us that the economy—and presumably Minnesota's economy, as well—will shift into high gear once taxes are cut on businesses and the wealthy?

Business cycles of growth and regression have characterized capitalist economies since the industrial era began centuries ago, so a "correction" seemed almost a given after a few years of sizable surplus revenue for the state. It'll be interesting to see what solutions are proposed by both DFL and Republican legislators. It'll also be interesting to see the degree to which those proposals can move beyond ideology and boilerplate propaganda to address practical issues.

The Dayton Deficit

The huge increase in the size of the MN budget under Mark Dayton is unsustainable. His legacy is sure - "tax and spend."

I cannot wait for the next governor election and the DFL candidate running on the Dayton spending legacy and campaigning to raise taxes yet again.

Dayton deficit?

I hate to keep bringing Republicans back to the REAL world but we just had big huge MN Supreme Court battle over the budget because it WASN'T Dayton's budget... the Legislator, which is completely controlled by Republicans wrote this budget. And this deficit was predicted because as usual, Republicans relied Mr. Magic to do their math. EVERY TIME Republicans get into power, and pull the levers of Government, they create a budget crises and try to blame it on someone else. Recession to follow.

dayton deficit

some call it investment -- others call it theft from the wealthy. I'm proud to live in a state that invests in its infrastructure, natural resources, healthcare for all, food and housing for the poor, and aging with dignity. These make Minnesota a very good state in which to work and live and enjoy its natural resources. Employers agree. I wouldn't want it any other way.

The Dayton Deficit

Republicans had no hand in the budgeting process? Even though they control both houses of the Legislature?

My, they are a weak and ineffectual bunch, aren't they?

Just remember now...

This deficit, like all the others was engineered by the Republicans, it's a direct and deliberate result of their policy. So now when they claim we have we have a "spending" problem instead of a revenue problem and demand cuts to services that tens of thousands if not millions of Minnesotan's rely on, like infrastructure spending, education, health care, etc. you KNOW this was deliberate and their clams to be trying to solve rather than create fiscal crises are simply ridiculous.

At best this was magical thinking, at worse, it was deliberate sabotage. Guy like me predicted this and we didn't need to be psychic, we've just seen before, many many many times.

Well stated Paul

Create a deficit through tax cuts that no one wanted then use that as the excuse to cut public investment. Seems to me we've been through this before. At least Republicans are consistent.

And to our Governor - If as you stated you believed the last budget would result in a deficit - an entirely reasonable assumption - why didn't you veto the budget rather than resort to the game of defunding the legislature?

Actually the defunding gambit may work

Unlike previous budget scenarios where Republican law makers get to throw hand grenades into everyone else's budget with impunity, we now have a precedent that the Governor can snap their funding. This isn't over, Dayton can keep vetoing their budget and they don't have the money to keep operating so the next "shutdown" is going to be the legislature. This may give Dayton the leverage he needs to force a real budget without going through a general government shut down, which is where we'd typically be headed at this point.

Maybe, hope springs eternal.

Sabotage

This is the playbook. They've done it over and over again.

question

Where is the accounting of the $600 million in tax cuts the Republicans forced through last year? I want to understand how the cuts break out.

Hmmm

We're down $188M, and the budget for the legislature is $130M, which is a good chunk of the $188M. I mean MILLION.

Make ya think.

CHIP?

News report today says that $178M of this $188M is due to MN covering costs related to CHIP dropped by the feds. So if true this deficit is due to unexpected incompetence and complacency by the GOP in DC and not decisions in St Paul.

Not really

Most people understand that being fiscally responsible means keeping sufficient surpluses on hand because things like this always come up. Republicans on the other hand keep saying that any surplus at all means everyone is being over-taxed, and that rationale drives tax cuts that zero out the surplus.