We have received our state’s new budget forecast. It calls for a surplus of almost $900 million. This shows new efficiencies and cost-containment measures we enacted this year are working.
There were some incredibly difficult decisions to make at the Capitol in our first year as a majority. It is good to see we not only erased a $5 billion budget shortfall, but also appear to have put our state’s budget on a better course. The budget report also shows Minnesota is outpacing the country as a whole in terms of recovering from the recession.
These are new economic times and I am proud of the work we did this year to help our state get back on track. This is a lengthy process and our work in this area is by no means finished. We are in the process of drafting another round of new bills that will help our state operate more efficiently and make better use of our tax dollars. There are many more areas for us to make improvements. I will pass along more information about those plans as we get closer to the upcoming session.
We are just coming out of a stretch where Minnesota had four consecutive years of budget shortfalls. Our state’s reserve accounts were tapped dry to help make ends meet during those tough times. State law indicates most or all of the projected $876 million surplus must be put toward replenishing the reserves. A news release below from Minnesota Management & Budget below provides more information on this topic.
I want to thank all the people who have continued to offer their support as we worked through extremely tough budget decisions. I look forward to receiving more input as we get ready for the 2012 session.
MMB NEWS RELEASE:
Current Law Allocates Entire Balance to Restoring Reserves
St. Paul—Minnesota Management & Budget Commissioner Jim Schowalter released the November budget forecast which shows an improvement in the state’s fiscal position. An estimated $876 million dollar balance is projected for the 2012-13 biennium, all of which is used to restore state reserves.
The 2011 fiscal year closed with revenues $358 million higher than expected and expenditures $205 million below prior estimates. Projected revenues for the 2012-13 biennium are expected to be relatively unchanged and projected expenditures are anticipated to be $348 million less. The combination of these factors yields a projected $876 million balance. The majority of projected expenditure reductions are accounted for in the Health and Human Services area.
Long-standing state statute is triggered by this forecast balance, directing this balance to the state’s cash flow account ($255 million) and the budget reserve ($621 million). If the balance were larger, current law would direct the additional dollars to buy-back the K-12 education shift.
“This is obviously good news and a helpful break from recurring budget gaps. It’s also a reminder that Minnesota still has some significant strengths – above average economic performance and the discipline to quickly stabilize its finances. Future risk remains, but at least we now have a cushion,” Schowalter said.
Forecast economic growth is projected down for the remainder of 2011 and 2012 compared to the February forecast but Minnesota continues to slightly outperform the national U.S. economy.The forecast shows a projected deficit of $1.3 billion for fiscal years 2014-15.
A complete report of the November forecast can be found on the MMB website at www.mmb.state.mn.us.