Pandemic hurts state finances less than feared, flipping MN budget projection from deficit to surplus

The impact of the coronavirus pandemic on the state of Minnesota’s finances doesn’t appear to be as bad as initially feared.
To be clear: Things are still iffy, and the state still faces a projected budget shortfall in two years, according to a new forecast released Tuesday.
But tax revenues now are projected to be higher than previously forecast, and government spending is projected to be lower, making the problem not as bad as expected.
The state’s Management and Budget Office now projects a $641 million surplus in the current two-year budget — a reversal from May and July, when projections showed a deficit.
The news is certain to be welcomed by Gov. Tim Walz and lawmakers of both parties, who are negotiating over a wide-ranging aid package for families and businesses hammered by the pandemic and its economic impact.
On Tuesday morning, state budget officials released a brief summary of a new state budget forecast:
“Minnesota’s economic and budget outlook have improved since May, when we released a budget projection just as the COVID-19 pandemic was taking hold. With this forecast, higher general fund revenues and lower expected spending result in a projected surplus of $641 million for the FY 2020-21 biennium. The improved budget outlook continues into FY 2022-23, but a $1.273 billion budgetary shortfall remains for that biennium. As the pandemic continues, economic challenges also persist. Minnesota has 184,000 fewer jobs than in February and, while the economic downturn has affected all Minnesotans, unemployment has disproportionately impacted lower wage workers.”
In May, the state projected a $2.4 billion hole in the current $48.3 billion budget. That hole was itself a whiplash swing from the previous forecast, which projected a $1.5 billion surplus — but that figure was released just as the first cases of COVID-19 were being diagnosed in America.
Precisely how or why Tuesday’s forecast includes higher state revenues was unclear Tuesday morning. A quick glance at the forecast’s executive summary suggests that one factor stems from how the pandemic has affected workers: Unemployment has hit lower-paid workers more. Lower-wage workers pay less in total taxes than high-wage workers, so the impact to state coffers is less. This phenomenon of the pandemic hadn’t been previously foreseen, at least not to the extent it has manifested.
State officials were scheduled to brief lawmakers and the media close to noon.
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Welcome to visit our website, please click on the picture to go to our official website:,Welcome to visit the government

Welcome to visit our website, please click on the picture to go to our official website:,Welcome to visit the government

Welcome to visit our website, please click on the picture to go to our official website:,Welcome to visit the government