Minnesota budget swings from $1.3B deficit to $1.6B surplus

State economists say Minnesota’s budget outlook has swung from a $1.3 billion deficit to a $1.6 billion surplus.

The projections released Friday will set up the debates for the rest of the legislative session over taxes and spending.

Minnesota Management and Budget says projections have improved due to an improved U.S. economic outlook, which has been bolstered by stimulus measures the federal government has taken since the state agency issued its last forecast in November.

The agency also cites a higher revenue forecast, lower projected state spending, and an increased surplus for the current fiscal year, which ends June 30.

JUST IN: Budget forecast whiplash in MN. A previous $1.3B projected deficit for 2022-23 is now a projected $1.6B surplus (without factoring inflation on the spending side.) The MN Office of Management and Budget says it’s due to combo of higher revenue and lower spending. pic.twitter.com/spedqKZNp1

— Tom Hauser (@thauserkstp) February 26, 2021

MMB Commissioner Jim Schowalter and State Economist Laura Kalambokidis said the $1.9 trillion stimulus package Congress is currently considering factors heavily into the forecast.

"Even though this is really good news, it’s important to note … that the bulk of this money is from one-time resources," Schowalter said, urging some caution.

"While the sun is starting to shine, it’s hardly in the clear," he added.

Gov. Tim Walz issued the following statement on the surplus:

"This budget forecast is good news for Minnesota. It proves that the measures we took during the pandemic have both saved lives and protected the economy."

"But state projections aren’t the same as household budgets. They don’t reflect the hardship that many Minnesotans have endured over the past 12 months. As we come out of COVID-19, we can’t forget the sacrifices so many of our workers and small businesses have taken to protect their communities. They’ve been heroes throughout the past year, sacrificing their own bottom line for their neighbors. And they saved lives. That’s why my budget focuses on leveling the playing field to support working families and small businesses."