Minnesota’s budget outlook remains stable in the short term, but there are clouds on the horizon, officials announced Wednesday.
The latest forecast from the Minnesota Office of Management and Budget projects a $2.4 billion surplus over the two-year budget period ending in June 2025. That’s an $808 million increase from projections at the end of Congress in May. The larger surplus remains only a fraction of the $72 billion budget.
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Tax revenues are expected to exceed previous forecasts due to rising expectations for growth in consumer spending and corporate profits. Budget officials said the reason for this was that the short-term economic outlook for the U.S. economy had improved since February, with consumer spending, business investment and employment stronger than expected.
But budget officials also warned of potential problems for the next two-year budget period, which begins in July 2025. Higher estimates for health and welfare services spending and education spending predict a deficit.
The latest projections mean lawmakers will have a little more money to spend when they reconvene in February for the 2024 session. Their options include spending it, putting it in the bank, or taking a tax break.
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Officials are expected to release further details later Wednesday. Gov. Tim Walz and legislative leaders from both parties are expected to respond.