Last week the Minnesota Office of Management and Budget (MMB) released its November budget forecast to the public. Initial reports put Minnesota's budget surplus at $1.037 billion for the 2016-2017 biennium, but those projections do not include inflation adjustments, as required under current state law or other statutory provisions.
The November forecast, while encouraging, does not provide all of the budgetary details nor tell the whole story. Further analysis indicates that as much as 72% of the projected surplus appears to be due to lower than projected spending rather than increased tax revenues flowing to state coffers which were expected from record tax increases imposed by the majority last session. Too many Minnesota families are still not seeing the same surpluses and wage growth that government budgets are.
Inflation could account for as much as 90% of the budget surplus meaning less money is left on the table to fund priorities or return to Minnesota taxpayers. In addition, it is a possible indication that the Minnesota economy is still somewhat flat, not growing as expected or worse, that both business and individual Adjusted Gross Income (AGI) is leaving the state in favor of a more competitive and less burdensome tax and regulatory climate.
These preliminary numbers seem to suggest that it was unnecessary to levy additional taxes from hard working taxpayers and Minnesota businesses. The actual budget that will be prepared by the 2015-2016 legislature will be based upon the February forecast and not last month’s data and will begin effective July 1, 2015. The previously adopted budget ends June 30, 2015. Let's hope that the February forecast does not further dilute the overstated November forecast.
The full Budget and Economic Forecast by the Minnesota Management and Budget Department can be found here.
State Representative, District 33A