ST. PAUL – A new economic forecast for Minnesota projects a state record $7.7 billion budget surplus for the next two-year budget cycle, a $9 billion turnaround from one year ago.
Minnesota Management & Budget issued an updated forecast Tuesday. It indicates “strong growth in income, consumer spending and corporate profits drove extraordinary revenue growth in FY 2021, and higher tax receipts to date in FY 2022 combine with an improved outlook for income, consumer spending and corporate profits to raise the revenue forecast for the current biennium.”
State Rep. Jordan Rasmusson, R-Fergus Falls, said tax relief and investments into an overburdened long-term care system should be top priorities in directing surplus dollars.
“This budget surplus represents an opportunity to provide historic relief from the pain Minnesotans are feeling amid soaring inflation, rising gas prices and higher energy bills,” Rasmusson said. “We also can use a portion of these dollars to help mitigate the growing crisis in our overburdened long-term care industry, where things are so desperate the National Guard is rendering aid.”
Furthermore, Rasmusson said the surplus dollars should be used to spare businesses in the state from suffering a tax increase that is scheduled to hit them Dec. 15. Record-setting unemployment claims depleted Minnesota's Unemployment Insurance Trust Fund, resulting in a debt of more than $1 billion to the federal government that is coming due.
“Unemployment Insurance tax rates are set to rise 15 percent or more to replenish the fund unless action is taken by the state,” Rasmusson said. “Minnesota is currently one of just 10 states that owes money to the federal government, and lacks a plan for how to pay that money back other than by raising taxes on Minnesota businesses. It would be an injustice for our state to allow businesses to suffer this tax increase at a time the state has nearly $8 billion in surplus revenue.”
The MMB report also indicates the improved budget forecast “triggers a statutory allocation to the budget reserve, leaving the reserve balance at $2.656 billion. While economic uncertainty and the pandemic pose significant risk to the forecast, the improved outlook carries into FY 2024-25 planning estimates.”
The $7.7 billion surplus follows a $1.3 billion shortfall projected in December of 2020 and a $1.6 billion surplus predicted last February.