After a series of budget deficits, state budget officials are estimating an $876 million surplus for the remainder of the two-year budget cycle.
That's according to the November forecast released Thursday by Minnesota Management & Budget (MMB) Commissioner Jim Schowalter.
The $876 million balance is projected because during the 2011 fiscal year, which ended on June 30, the state received $358 million more in revenue than previously expected, and actual expenditures fell $205 million below prior forecasts.
Revenues for the remainder of the 2012-2013 biennium, meanwhile, are expected to remain relatively unchanged from prior forecasts, while the state is projecting $348 million less in expenditures; the bulk of those expenditure reductions are expected to occur in the health and human services area, MMB said.
According to several media reports, state lawmakers had been bracing for bad news in the forecast, after they worked to resolve a $5 billion deficit to end a 20-day state government shutdown earlier this summer. According to a report by the Star Tribune, the projected surplus follows a four-year string of deficits; the last time Minnesota was in the black was February 2007.
Law requires that the forecast balance be used to restore the state's reserves, and the new projections will result in $255 million being added to the state's cash flow account and $621 million to the budget reserve, MMB said.
"This is obviously good news and a helpful break from recurring budget gaps. It's also a reminder that Minnesota still has some significant strengths-above average economic performance and the discipline to quickly stabilize its finances," Schowalter said in a statement. "Future risk remains, but at least we now have a cushion."
Minnesota's economy has outpaced that of the rest of the nation, MMB said. And the state's unemployment rate remains well below the U.S. average.
Despite the positive news of the surplus, MMB said that expected longer-term future economic growth is actually down from the previous forecast, which was released in February. The new forecast shows a projected deficit of $1.3 billion for the 2014-2015 biennium.
MMB said that economists have "tempered their optimism" in part because oil prices, slow employment growth, supply-chain disruptions, and a decreasing confidence in government and its leaders have caused slower than expected economic growth.
The complete November budget forecast can be downloaded here.