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Legislative Update from Rep. Glenn Gruenhagen

Thursday, December 3, 2020

Dear Friends and Neighbors,

On Tuesday, Minnesota Management and Budget released their updated November forecast. Tuesday's forecast showed a $641 million surplus for the current two-year budget cycle, and a $1.273 billion deficit in the 2022-2023 budget cycle. 

This news is a major improvement for our state's economic picture. At the beginning of the COVID-19 pandemic, state economists projected a $2.3 billion deficit for the current budget cycle, and a $4.7 billion deficit in the 2022-2023 cycle. The improved outlook is thanks to better-than-expected tax revenues driven by a rebounding economy, strong consumer spending, and federal relief that allowed unemployed workers to continue paying income taxes (unemployment benefits are taxable income at the state level). 

State spending also dropped by about a billion dollars. There was a $919 million drop in Health and Human Services spending as a result of lower-than-expected Medical Assistance utilization, lower-than-expected overall program utilization, and federal spending that helped cover portions of our public programs. There was also a $118 million drop in education spending because of lower public school enrollment with parents opting to home school their children or delay the start of kindergarten. 

Overall, this is good news, and our stabilized budget outlook is thanks to the hard work and sacrifice of Minnesotans and their families. 2020 has not been easy for anyone, and mandated business closures from Governor Walz have caused significant damage to our state’s economy. Despite the Governor’s orders, Minnesotans remain resilient and today’s positive economic news further reinforces that truth.

With House Democrats already signaling that tax increases are coming next year, we must remember that families and businesses have scaled back their budgets and there's no reason we can't ask government to do the same. Tax increases will only slow our economic recovery and job growth.

Please do not hesitate to reach out to me to share your thoughts, questions, and concerns as it relates to state government. I can be reached at 651-296-4229 or via email at rep.glenn.gruenhagen@house.mn.

Have a great day,

Glenn

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