ST. PAUL, Minn. - The Land of 10,000 Lakes is starting to toil with a $1.65 billion projected surplus. But after a decade of budget deficits, where is this string of surpluses coming from?
I know you are anxious to come home from work and read the Minnesota Management and Budget Office’s 77-page 2018-2019 budget forecast. Would it help if we used cookies?
Let’s start with the basics, shall we? The state budget office expects to spend about $46.734B in the next two years. It expects to rake in about $48.384B in revenue and savings. Quick subtraction gets you to that $1.65B figure.
But why all this extra change all of a sudden?
“Well a lot of people will remember we had a decade of deficits back in 2000 to 2010, 2011,” said Myron Frans, the commissioner of the MMB. “That really happened because our revenue stream just wasn't supporting what we wanted to spend. It's as simple as anyone's check book. So in this new string, we have eight forecasts in a row with a forecast balance for a surplus.”
There are three main streams that make up this surplus, and they all come from a recovering economy, according to Frans.
This starts with individual income tax, which the MMB projects will bring in about $651M or six percent more income to the budget than it is currently.
“More people are working and making more money. It's really that simple. As Minnesota's unemployment rate has gone down, we have the highest labor participation rate in the country right now,” said Frans.
The second growing revenue piece is sales tax. Frans explains that more people are making more money; therefor, more sales tax is accumulating.
The MMB projects sales tax revenue to grow by 4.6 percent or $244M in 2018.
The last chunk of change contributing to the surplus is corporate taxes, which are projected to increase about 12 percent or $138M in 2018, according to the report.
“We have the largest reserve in state history. We've been able to set aside $2B in cash and reserves in case there's an economic downturn,” said Frans.
The question now, how will the money be spent?