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ST. PAUL – On Tuesday, Minnesota Management and Budget released the November forecast, showing a projected $188 million deficit due to lower-than-expected revenues based on assumptions about federal legislation and U.S. GDP and wage growth.
The forecast also reflected $178 million in state spending on the federal Children’s Health Insurance Program, nearly all of which would be backfilled once CHIP is renewed at the federal level. Despite the uncertain forecast, Republican leaders touted Minnesota’s strong economy, and anticipated stronger revenue estimates when the forecast is updated in February.
“I wish the forecast would have come in more even, but this is partly the product of some uncertainty at the federal level overshadowing growth in our state,” said Rep. Paul Anderson, R-Starbuck. “There are a number of reasons for optimism in our state’s economy, such as an extremely low unemployment rate and rising wages. The hope is we will see that economic growth has continued when our next big forecast is issued in February. That forecast will be the important one in terms of setting a framework for the 2018 session.”
Assumptions about federal legislation and U.S. GDP and wage growth contributed to lower-than-expected revenue assumptions. The forecast assumes that no tax bill will be passed at the federal level despite passage in both the House and Senate last week, and assumes 2.2 percent GDP growth in 2017 despite 3.1 percent growth in the second quarter and 3.3 percent growth in the third quarter.
The full budget forecast report from MMB can be found by clicking here.
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