Minnesota’s tax collections are running behind projections, and the state’s economic consultant has slightly downgraded growth estimates, according to a report Tuesday from the state finance agency.
The Minnesota Management and Budget quarterly economic update shows state government’s fiscal year is off to a lackluster start. From July through September, Minnesota took in $66 million less than anticipated. That’s about 1.4 percent below revenue projections. Income and sales taxes were both down while corporate taxes ran about even.
The report is confined to the revenue side of the ledger. A comprehensive review that also considers spending patterns is due out after Thanksgiving.
But that could be another dose of sour news because growth figures were also reduced. Without passage of a federal infrastructure or tax plan yet, economists predict a slower-growing national economy than once forecast for next year. Instead of 2.7 percent growth for the year, state consultant IHS Markit now says it should run about 2.4 percent.
“Recent natural disasters will exacerbate economic volatility through the first quarter of 2018. At the same time, expectations for fiscal stimulus effects in 2018 have faded,” the report said. “With their October baseline, IHS has removed their previous assumptions of tax cuts and infrastructure spending that would boost growth in 2018.”