State projects $1.9B budget surplus

Published 10:03 am Thursday, December 3, 2015

ST. PAUL — Minnesota finance officials pegged a projected state budget surplus Thursday at nearly $1.9 billion over the next 19 months, a figure sure to heighten the tug-of-war between those who want the bulk to go to tax cuts and those who want to fortify government programs while times are good.

The economic forecast produced by the Department of Minnesota Management and Budget details the state government finances while estimating the amount of money lawmakers will have at their disposal in the Legislature’s election-year session.

The surplus comes from a variety of factors, including tax collections streaming in above earlier estimates. The Legislature and Gov. Mark Dayton had also left $865 million unspent in the last session after failing to agree on a tax-cut bill and a long-term spending plan for road and mass transit construction. The forecast also looks at spending patterns and economic conditions around the world that are expected for years into the future. It will take into account worry spots, such as a mining industry facing tumult and a sputtering stock market the last few months that could translate into smaller capital gains tax collections.

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Speaking on Wednesday before even he knew what the report would show, Dayton said a healthy surplus would punctuate a “remarkable turnaround” from the repeat deficits he faced early in his tenure as governor.

By law, one-third of the excess money is automatically shifted into the state’s rainy-day reserves.

“Not only are we spending money responsibly, but we’re setting money aside for the next economic downturn whenever that occurs,” Dayton said.

Senate Republican Leader David Hann called for the state to send some of the money toward improving roads and bridges “and give the rest of the surplus back to taxpayers.”