(The Center Square) – Minnesota financial officials are projecting a $2.4 billion surplus for the 2024-25 fiscal year, up $808 million from the end-of-session estimate.
Minnesota’s budget and economic outlook remain stable in the current biennium, but a “significant structural imbalance” has limited the budget outlook for the 2026-27 fiscal year.
The summary notes: “Higher estimates in health, social services, and education increase total spending in fiscal year 2024-2027, leading to a negative structural balance in the next fiscal year biennial. »
Minnesota expects to face a $2.3 billion deficit in the 2026-27 fiscal year.
Expected rises in consumer spending and growth in corporate profits raise tax revenue forecasts for the 2024-25 fiscal year.
The near-term U.S. economic outlook has improved since February, driven by higher-than-expected consumer spending, business investment and employment.
For example, a report says Minnesota’s new paid family and medical leave program will cost taxpayers about $628 million more than expected and that the PFML tax will be 31% higher than expected in the second year.
Senate Minority Leader Johnson, R-East Grand Forks, blamed the slight surplus on the $72 billion budget passed by Democrats, which exhausted the previous surplus of about $17 billion.
“They spent the entire surplus, raised taxes by $10 billion, and now we see future deficits looming on the horizon,” Johnson said in a statement. “Minnesotans cannot afford single-party Democratic control.”
Johnson said Democrats were underfunding the mandates, which would lead to more tax hikes.
“The insatiable appetite for tax increases will only grow this session,” Mr. Johnson said. “Despite historic funding for education, local schools are proposing local tax increases because Democrats have underfunded their mandates. Small businesses face rising taxes, health care costs and inflation. Consumers are spending more because costs are higher due to inflation.
House Speaker Melissa Hortman, DFL-Brooklyn Park, said Democrats will continue to focus on growing the economy.
“Today’s economic forecast shows that Democrats are growing Minnesota’s economy and the policies we have adopted support Minnesota workers, lower costs for families and grow the workforce,” Hortman said in a statement. “At the same time, as our economy continues to perform well and corporate profits continue to soar, we know that some Minnesotans are not faring as well in their household budgets. You’ll see Democrats continue to focus on growing the middle class, cutting costs, and reducing stress in people’s lives. We will continue to work to build a Minnesota that works better for everyone and reflects the values we all share.
The 2024 legislative session begins February 12.