Even the worst-case scenario might not reflect an accurate picture of the economy, however, as the state will have to wait to see the full effect of the COVID-related shutdowns.
The deal struck to end the 2019 Legislature used $491 million out of Minnesota’s rainy day fund to keep the state’s books in the black, creating a precedent that budget writers will have to deal with going forward.
Under a budget deal passed by the Legislature, they money was contingent on tax revenue exceeded the forecast by at least $63 million between February and the end of June.
In order for legislative leaders to reach a budget deal this year, they made the appropriations for three different areas dependent on how much extra money came in to the state during the first half of 2019.
The forecast was released at an already complicated time. The relationship between Gov. Mark Dayton and GOP leaders remains rocky, and lawmakers are facing a short session at the start of a major election year.
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.