Minnesota’s projected surplus increases to $3.7 billion, but potential warning signs in future years

ST. PAUL, Minn. — Minnesota is projected to have a budget surplus of $3.715 billion this biennium, according to state budget officials, who urged lawmakers to be cautious with any additional spending this year to avert a potential future deficit.

On Thursday, Minnesota Management and Budget released its latest budget and economic forecast. The $3.715 billion surplus is an increase of $1.324 billion from the projection in November.

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“Higher collections so far this fiscal year raise the current biennium forecast for all major tax types. Corporate tax revenue shows the largest change, driven by higher-than-expected corporate profits through the forecast horizon,” MMB said in a release.

Budget officials say the “near-term economic outlook” has seen improvement and growth is expected to persist through 2027.

However, the warning signs from last fall’s budget forecast continue. Officials say that revenues will not keep pace with revenues in the next budget cycle. That could lead to a potential deficit down the line.  

“The higher revenue forecast throughout the FY 2024-27 planning horizon results in improvement to the structural budgetary balance, but spending is still projected to exceed revenue through FY 2027,” the MMB said.  

 State law requires a budget forecast from Minnesota Management and Budget twice yearly in February and November. It looks at how much money the state is bringing in in terms of revenue, how much it’s spending and what the economic outlook is now and in future years.

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In November, officials predicted that at the end of this biennium — the two-year budget cycle that began last July and will end in June of next year — there was a $2.4 billion surplus. That might seem small to the $17.6 billion surplus we had a year and a half ago, but it was still more than what budget officials at the time thought it would be.

State lawmakers will use these latest projections to inform their work at the state legislature and any additional investments they would like to make. But the budget chief told reporters that future budget constraints need to be considered when making decisions.

“It is worth noting that caution should still be exercised this legislative session when it comes to ongoing spending,” said MMB commissioner Erin Campbell.

This is a developing story. Stay with WCCO.com for more.

Cole Premo

Cole Premo is a web producer at WCCO.com. For more than a decade, he’s been covering breaking news and weather, daily topics, stories from the Native community and more in Minnesota.