Minnesota House of Representatives


State Representative Kathy Lohmer

501 State Office BuildingState Office Building
100 Rev. Dr. Martin Luther King Jr. Blvd.

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Posted: 2011-12-02 00:00:00
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Budget decisions pay off, budget surplus projected

Dear Neighbor,

The new Legislature’s commitment to responsible spending is paying dividends, having turned a state budget shortfall into an $876 million surplus in just a few months, even surpassing initial projections.

This is welcome news as we work hard to rebound from a deep recession and put our state on a better fiscal course. Minnesota faced budget shortfalls the last four years under the previous Legislature, including a $5 billion deficit we inherited when we took office in January. We are in a new economic era and the new majority entered the 2011 session determined to contain budget costs and enact reforms to maximize the effectiveness of our tax dollars. It simply was time to make responsible decisions to get us off that budgetary rollercoaster.

News of our state budget surplus comes from the latest Minnesota Management & Budget forecast issued Thursday. The report shows Minnesota is outpacing the national economy – see the news release below – in recovering from the recession. The first round of reform measures we passed this year are a significant factor in making that happen, but our work is far from finished. We are in the process of putting together even more bills that will provide additional efficiencies and eliminate unnecessary spending.

State statutes stipulate the surplus funds must be used to replenish reserve funds which were depleted during previous shortfalls. I am confident the new fiscally responsible approach we’ve brought to the Capitol will continue to produce results so we can receive more good news when the next budget forecast is issued in February.

This was a very difficult year in the Legislature as we worked to eliminate an enormous budget shortfall, but it also is rewarding to see improvements we made already taking root. The support and encouragement I continue to receive from local people along the way really is appreciated and I welcome your input as we stay on task to bring our state up to speed with today’s economy, complete with significant global factors.



Current Law Allocates Entire Balance to Restoring Reserves

St. Paul—Minnesota Management & Budget Commissioner Jim Schowalter released the November budget forecast which shows an improvement in the state’s fiscal position. An estimated $876 million dollar balance is projected for the 2012-13 biennium, all of which is used to restore state reserves.

The 2011 fiscal year closed with revenues $358 million higher than expected and expenditures $205 million below prior estimates. Projected revenues for the 2012-13 biennium are expected to be relatively unchanged and projected expenditures are anticipated to be $348 million less. The combination of these factors yields a projected $876 million balance. The majority of projected expenditure reductions are accounted for in the Health and Human Services area.

Long-standing state statute is triggered by this forecast balance, directing this balance to the state’s cash flow account ($255 million) and the budget reserve ($621 million). If the balance were larger, current law would direct the additional dollars to buy-back the K-12 education shift.

"This is obviously good news and a helpful break from recurring budget gaps. It’s also a reminder that Minnesota still has some significant strengths – above average economic performance and the discipline to quickly stabilize its finances. Future risk remains, but at least we now have a cushion," Schowalter said.

Forecast economic growth is projected down for the remainder of 2011 and 2012 compared to the February forecast but Minnesota continues to slightly outperform the national U.S. economy.

The forecast shows a projected deficit of $1.3 billion for fiscal years 2014-15.

A complete report of the November forecast can be found on the MMB website at www.mmb.state.mn.us.

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