ST. PAUL, MN—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 (CHIP), 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.
"This forecast shows Minnesota's economy is strong with the lowest unemployment rate in years and wages rising for workers." Rep. Wills said. "I expect the budget numbers to improve after the February forecast as our nation's economy continues to grow. My focus here at the Capitol will continue to be increasing paychecks by growing good-paying jobs and reducing taxes for Minnesota families."
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% GDP growth in 2017 despite 3.1% growth in the second quarter and 3.3% growth in the third quarter.
The full budget forecast report from MMB can be found by clicking here.
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