Minnesota budget surplus projected at $7.7B
Published 6:43 pm Tuesday, December 7, 2021
By Bill Salisbury
Pioneer Press, St. Paul
The state of Minnesota will head into 2022 with a $7.7 billion projected budget surplus for the current two-year budget cycle, state finance officials announced today.
That’s enough money to provide more than $1,000 to every Minnesotan.
But that won’t happen. Here’s why:
Some $870 million or the surplus by law will be siphoned off to restore the state’s budget reserve, also known as its “rainy day fund.”
While Republican leaders have already started calling for tax relief, DFL Gov. Tim Walz has said he plans to propose a “robust” supplemental spending plan early next year that probably would increase funding for schools and help people recover from economic losses caused by the coronavirus pandemic.
House Republicans have also called for spending some state money to replenish the state’s unemployment insurance trust fund that was drained to pay jobless benefits during the pandemic. The state borrowed more than $1 billion from the federal government and must start paying off that debt this month.
Businesses will face payroll tax increases if the state doesn’t step in and pick up part or the entire tab. It could use some of its unused federal COVID dollars to address that debt.
Walz and the 2023 Legislature, which convenes Jan. 31. will decide what to do with the surplus.
The Minnesota Management and Budget agency said the state’s fiscal outlook over the next three years is significantly better because of “an improved U.S. economic outlook that is bolstered by large federal actions that have emerged since November and were not incorporated in earlier projections.” It said the state’s positive balance has also improved because of a higher revenue forecast, from “strong growth in income, consumer spending, and profits,” as well as lower state spending.
But the agency noted that the state’s economic improvements “have not been spread equally as unemployment continues to disproportionately impact lower-wage workers.”
The agency and Walz are scheduled to release a detailed forecast later Tuesday.
Already Tuesday morning, the state’s top Republicans were releasing statements. Senate Majority Leader Jeremy, R-Winona, released the following statement:
“The budget surplus gives our state a lot of options to make the lives of Minnesotans more affordable. With inflation, increasing energy prices, and continued economic hardship, it’s more important than ever for us to partner together to make sure families have the resources they need to thrive. We can also provide our small businesses the economic support to grow and create good-paying jobs. The top priority of Senate Republicans this session will be to provide additional tax relief to Minnesotans across the state.”