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Dear Neighbor,
With Minnesota Management & Budget having released an updated state economic forecast, we now have a full picture of our state’s finances to consider the remainder of the 2020 session.
The state budget already is in place for this biennium, but we can adjust based on what we now know about our bottom line.
Most notably, our state is in strong shape fiscally, with MMB projecting a $1.5 billion surplus for 2020-21. This figure is up $181 million from the $1.332 billion surplus projected in the November.
In addition to the surplus, the budget reserve and cash flow account balances are unchanged. The cash flow account balance is $350 million in each year 2020-23. The budget reserve (Rainy Day Fund) balance for the 2020-21 biennium is $2.359 billion.
It is important to have these strong reserves available to help us mitigate future economic storms, such as the Great Recession of 2008 that depleted our reserves. In fact, state statute dictates that a percentage of surplus funds are directed to the Rainy Day fund when certain conditions exist. That fund is now statutorily full and that money that is in the bank, so to speak – not just a projection.
That means the $1.5 billion can be used to provide robust tax relief without even touching the piggy bank. House Republicans are working on a package of tax relief that will benefit virtually all Minnesotans, so look for the unveiling of that to come soon.
In other news, the House passed a bill with broad, bipartisan support this week (on a 127-2 vote) to replenish the Rural Finance Authority loan program which aids farmers.
It took longer than necessary to approve a new round of funding because House Democrats blocked a proposal to bring urgency to the matter last month, before the RFA funding ran dry. The good news is $50 million in RFA funding now is on to the Senate, where I am hoping they provide quick approval and send it to the governor for enactment so we can eliminate some uncertainty for farmers entering the new growing season.
On a final note, I want to thank all the people who attended the recent precinct caucus meetings and voted in our presidential primary this week. These are important steps in civic engagement and your participation is greatly appreciated.
Until next time, have a good weekend and enjoy the balmy weather.
Sincerely,
Bud
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