MN Tax Collections Now $324M Higher Than Expected
Minnesota officials recently announced that the state has once again taken in more revenue than previously expected.
In May, net general fund revenues totaled $1.4 billion. That’s $25.8 million, or 1.9 percent, more than the state had forecast in February, Minnesota Management and Budget Commissioner Jim Schowalter wrote in a recent memo.
Income and corporate tax revenue both outpaced previous expectations, offsetting lower-than-expected sales taxes, according to state data.
The state said that monthly revenue collections data may be subject to revision, and a more detailed report regarding April, May, and June revenue will be released as part of its July economic update.
May continued a trend of stronger-than-expected tax collections: Year-to-date, state revenues are now $324 million higher than February’s forecast.
The state reported its tax windfall before $2.1 million in new taxes is set to kick in, as recently approved by the state legislature. The extra funds are allowing the state to replenish its reserves and pay down money it still owes local school districts, according to a recent Star Tribune report, which was published before the release of May’s tax revenue data. (By law, any revenue that comes in over projection must go to replenish the state’s reserves and then to repay the school debt, the Minneapolis newspaper reported.)
Republicans contend that the higher-than-anticipated tax revenues serve as evidence that their refusal to increase taxes when they were in power at the capitol has spurred economic growth, according to the Star Tribune. Democrats, meanwhile, have reportedly said that Republicans’ emphasis on cutting and borrowing is why they were unable to regain power during the last election.
Tom Stinson, the longtime state economist who recently announced plans to step down from his role, said the state’s reliance on borrowing and shifting in those years caused lasting damage to the state’s credit rating, the Star Tribune reported.