Minnesota projects short-term budget surplus, long-term deficit as health, education spending hikes kick in
Minnesota's budget picture remains stable in the near term but there are clouds on the horizon, officials announced Wednesday.
An updated forecast from Minnesota Management and Budget projects a surplus of $2.4 billion in the two-year budget period that runs through June of 2025. That's up $808 million from the estimate at the end of the legislative session in May. The bigger surplus still accounts for just a fraction of the budget of $72 billion.
Higher expectations for consumer spending and corporate profit growth are expected to raise tax revenues above the previous forecast. Budget officials say that's because the near-term U.S. economic outlook has improved since February, driven by stronger than expected consumer spending, business investment, and employment.
But budget officials also warned of potential problems for the next two-year budget period, which begins in July of 2025. Higher estimates for health and human services spending, and education spending, are expected to result in a projected deficit.
The updated projection means that lawmakers will have a little more money to work with when they reconvene in February for the 2024 legislative session. Their options will include spending it, banking it or cutting taxes.
Officials plan to release more details later Wednesday. Gov. Tim Walz and legislative leaders from both parties plan to provide reaction.