Minn. state budget surplus rises to $1.23 billion for 2014, 2015 fiscal years

State finance officials say Minnesota has a $1.2 billion projected budget surplus in the current two-year budget cycle. That’s a $408 million increase over the last forecast released in December.

The improvement is due entirely to better revenues driven by a stronger economy, Minnesota Management and Budget Commissioner Jim Schowalter said Friday as he released the newest state economic and budget forecast.

“It’s really a pretty simple story to explain because what’s happening is we’re seeing improved national economic performance, diminished uncertainty about national fiscal policy as well as an excellent local economy,” he said. “All of this adds up to improvement in our state revenues as well as state jobs and incomes.”

Gov. Mark Dayton and DFL legislative leaders will now have to decide how they want to spend the money. Dayton and House Democrats are pushing for tax cuts as high as $600 million. Some Senate Democrats, however, say they want to see much of the money put in budget reserves.

Dayton on Friday said he’ll send his supplemental budget ideas to the Legislature next week. 

The improved financial picture shows “there is a positive role for government to play in our state’s economic progress” and the next step is to decide “how best to allocate this biennium’s $1.2 billion surplus,” the governor said in a statement. “The individual and business tax cuts in the House tax bill are a very good start.”

Today’s forecast comes less than a year after Dayton and the DFL-controlled Legislature passed $2.1 billion in tax hikes. Those tax increases are showing no signs of slowing the state’s budget outlook, said State Economist Laura Kalambokidis.

“The story about the Minnesota economy at the moment is that we’re continuing to make solid gains and so we’re growing and we’re growing at approximately the same rate as we were last year,” she said. “If the tax changes of last year had a dramatic change on the economy, we’re not seeing it in the data right now.”

  • Click here for the full set of documents connected to the new economic and budget forecast.
  • jeffk

    Amazing what happens when you put adults in charge.

    • JRS

      Meaning that we discovered that we were severely overtaxed and have a budget that nobody has a handle on? I suppose that it’s better than a deficit (no shutdown), but I’d sure like to know how this happened. The estimated surplus grew by $408 million since December??? To be sure, this isn’t the fault of (or the contribution by, depending on how you want to look at it) just the Democrats or just the Republicans, but it isn’t completely isolated to the legislature’s activity in the last two years. It shows that our state budgeting is way out of whack. In the late summer/fall (anyone remember what those seasons feel like?), Dayton proposed a bunch of new taxes and now he’s pulling for $500 million in cuts. If any corporation/nonprofit/small business/family ran their finances this way, they’d be out of business/nonexistent/out on the streets. Where’s the accountability?

    • Jeff

      You mean the Republicans who shored up the budget in the session before…now with the last session new taxes were enacted which created a massive surplus due to not listening to the Republicans who said we had enough money all along. Due to the over taxation we must now repeal many of the taxes that we didn’t need in the first place. Yes, that is great…doing twice the work and ending up where you started…how about listening to the Republicans next time around?

      • jeffk

        You don’t know how much you’re going to have since it’s impossible to predict exactly. The prudent — dare I say “conservative” — thing to do is to collect a little extra and have a small surplus. Now we have the enviable problem of either giving it back, or using it for any number of purposes.

        • Jeff

          So it’s a good situation to be in to do something twice wasting time and effort not only for the legislature but for every individual, business and accountant who was preparing for the new tax in their budget and now has to create a secondary budget due to all these changes. These numbers were not some sort of mystery…almost every economic forecaster was predicting higher revenues for the state. In my mind I’d rather have the numbers match up much more closely and have to make some modest cuts to spending (or small tax cuts due to a small surplus). Your thought process completely ignores that people/businesses have to prepare for these large changes in tax policy and makes an assumption that it is best for government to have more of our money and then give it back as some sort of reward…rather than realizing all the tax dollars the tax payer’s money first and foremost.

          • jeffk

            I’d call it better than the situation where we are over budget and then have to start cutting thoughtlessly. And to play the game where we compare government to a business, I suspect any business-owner would feel the same way.

            Who is this hurting? There were no “large changes” in tax policy; not only were they not especially large but they were never even implemented, and wouldn’t have been until next year. Nobody was killing themselves over that. And if it ended up being a minor inconvenience to businesses, so be it — I’ll take that over unplanned cuts which inevitably fall on those whom they hurt most, or our schools.

          • Jeff

            So you agree, this surplus had nothing to do with Democrat actions since many of these taxes have yet to even be generated. Glad to hear that you support the Republican’s budget.

  • jj

    fix the roads, please! before my car is eaten by one of those ridiculous pot holes!

  • Rob Moore

    Personal opinion; how about we take that money and fix some roads and bridges that are failing. Our infrastructure could use a bit of help.