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’s economy is strong, with unemployment rates lower than they have been in many years and earnings on the rise,” said Rep. Bud Nornes, R-Fergus Falls. “In this economic forecast, some unresolved issues at the federal level seemed to diminish those positive aspects of Minnesota’s economy, something that could be rectified by the time our next forecast is issued in February. At that point, we will know for certain whether growth has closed the gap or if a legislative response is necessary.”
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.