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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.
“Minnesota has the lowest unemployment rate in nearly two decades and wages are on the rise – both of which bode well for our state’s bottom line,” said Rep. Chris Swedzinksi, R-Ghent. “We are best off taking this forecast with a grain of salt and the February forecast will provide the figures that really matter in terms of how the Legislature responds. I am confident our state’s growth will continue, so let’s hold tight and see where things stand in a few months.”
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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