Updated State Budget Forecast Shows Surplus

Posted on February 28, 2018 by Jeff Bostic

Minnesota’s latest budget forecast predicts a $329 million surplus for the current biennium, which runs from July 1, 2017 through June 30, 2019. 

In the previous forecast from November of last year, a $188 million shortfall had been predicted.

The improvement in the state’s budget forecast was anticipated, in part because since the previous forecast the federal government renewed the Children’s Health Insurance (CHIP) program, contributing to a projected reduction in state spending in the biennium by $167 million. State revenues are also projected to be higher by roughly $353 million largely due to the stimulus effect of the federal tax changes that were approved after the previous forecast. 

The planning estimates for the 2020-2021 biennium also show significant improvement compared to the previous forecast, improving from a projected deficit of $337 million to a projected surplus of $313 million. Those improvements are largely due to the same factors impacting the forecast for the current biennium. 

The improved state budget forecast likely means that the Legislature and Governor will take limited action on budget items in the current session. Since it is a short session and they do not need to pass a budget or adjust the existing budget for a deficit, they are likely go focus on a bonding bill and other issues such as state tax changes to align our system with the new federal tax bill.