UPDATE: Latest projection shows Minnesota budget deficit of $2.4B

The latest Minnesota budget projection for the current biennium has significantly worsened since the start of the COVID-19 pandemic.

At the end of February, the state had a projected surplus of just over $1.5 billion. On Tuesday, that outlook switched to a projected deficit of $2.426 billion, a swing of almost $4 billion.

Minnesota Management and Budget (MMB) released the updated projection for Fiscal Years 2020 and 2021 to show the impact of the pandemic on the state, which has seen more than 605,000 people file for unemployment since the start of the outbreak.

MMB said revenues for the biennium are projected to be $3.611 billion lower while spending is expected to be $391 million higher.

The department also said the state’s $2.359 billion budget reserve remains available to help mitigate the budgetary impact of the crisis. However, due to uncertainty over the pandemic, MMB expects the economic outlook to remain volatile for some time.

MMB Commissioner Myron Frans and State Economist Dr. Laura Kalambokidis and State Budget Director Britta Reitan will join Gov. Tim Walz Tuesday at 2 p.m. to present more details on the updated budget projection. You can watch that live here.

An earlier version of this report appears below.

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The entire state has taken a big financial hit from the COVID-19 outbreak.

Tuesday, Minnesota officials will provide an update on how the virus is affecting the state’s projected budget.

There are expected challenges ahead with the economy as it opens up once again, which is why an update on the current budget is expected.

Normally, there are only a couple updates a year; however, Gov. Tim Walz said he wants to give state legislators an idea of what the state has to work with.

Entering 2020, the state was in good shape. It had a $1.5 billion surplus and Walz was touring the state touting a $2 billion bonding bill plan.

Republicans wanted those who receive social security to get some tax relief and Democrats wanted early education to receive a boost.

Minnesota’s projected surplus grows to over $1.5 billion

That was when the state had a fully-functioning economy.

Now, Walz may want 80 percent of that $1.5 billion for a COVID-19 impact fund.

5 EYEWITNESS NEWS expects to learn more about a task force Walz is creating for this purpose, soon. The task force’s goal is to figure out the best way for the economy to bounce back.

"Called the Governor’s Council for a Safe and Inclusive Economy, this is something we want to start now because we have to be thinking longer term about how Minnesota’s economy is going to bounce back from this and how we can make an even stronger economy on the other side because we are going to recover from this crisis." Minnesota Department of Employment and Economic Development Commissioner Steve Grove said.

Since February, state leaders have said economic conditions have dramatically changed and government costs connected to COVID-19 have increased.

5 EYEWITNESS NEWS expects to learn how that will affect the budget, and communities throughout the state, Tuesday afternoon.

Stay with 5 EYEWITNESS NEWS and KSTP.com for updates.