MN’s $323M Surplus Adds to Reserves, Pays Down Debt
Minnesota has a $323 million budget surplus-and the excess funds have already been allocated to rebuild state reserves and pay off part of the state's debt to public schools.
Minnesota Management & Budget (MMB) Commissioner Jim Schowalter, who issued the February budget forecast on Wednesday, described the surplus as “modest.”
“This forecast confirms the last forecast-our state's economy is growing and our budget situation is improving,” Schowalter said in a statement. “The trouble is that we still have lots of IOUs, so it's not a time to let down our guard.”
In fact, the entire forecast balance is already allocated under state law. The first $5 million must be appropriated to the budget reserve, which brings that total balance to $653 million.
The remaining $318 million of the surplus is committed to pay back a portion of money that was borrowed from the state's school system during the last legislative session in order to help balance the budget. Following the payment, the state will still owe $2.4 billion in payments to the state's schools.
MMB releases a budget forecast twice annually-in November and February. The surplus in the most recent report essentially means that revenues are expected to exceed expenditures by $323 million over the remainder of the two-year budget period that ends on June 30, 2013.
It marks the second consecutive positive forecast: The state projected an $876 million balance in November. Those funds were used to replenish the state's reserves.
According to a report by the Star Tribune, the two consecutive positive budget forecasts follow a four-year string of deficits; the last time Minnesota was in the black was February 2007. And they come after state lawmakers worked to resolve a $5 billion deficit to end a 20-day state government shutdown last summer.
Still, a significant gap remains for the next two-year budget period: The forecast projects a deficit of $1.1 billion for the 2014 and 2015 fiscal years-down just slightly from the $1.3 billion forecasted in November's report.
Too, “federal policy unknowns, such as post-election fiscal policy and state policy choices” related to health care reform, “have increased the likelihood of significant changes” to the budget outlook for the upcoming two-year period, the report states.