ST. PAUL – On Tuesday, Minnesota Management and Budget released the November forecast, showing a projected $188 million deficit due to lower-than-expected revenues based on assumptions about federal legislation and U.S. GDP and wage growth.
The forecast also reflected $178 million in state spending on the federal Children’s Health Insurance Program, nearly all of which would be backfilled once CHIP is renewed at the federal level. Despite the uncertain forecast, Republican leaders touted Minnesota’s strong economy, and anticipated stronger revenue estimates when the forecast is updated in February.
“Our state is in pretty good shape overall, with unemployment at a 17-year low, wages on the rise and an economy that continues to outperform the national growth rate,” said Rep. Matt Bliss, R-Pennington. “With those strong numbers driving our bottom line, I am confident our state will be in good shape once some unfinished business shakes out at the federal level. We will have a clearer picture when the state’s next forecast is issued in February. Those are the figures that really matter from a legislative standpoint.”
Assumptions about federal legislation and U.S. GDP and wage growth contributed to lower-than-expected revenue assumptions. The forecast assumes that no tax bill will be passed at the federal level despite passage in both the House and Senate last week, and assumes 2.2 percent GDP growth in 2017 despite 3.1 percent growth in the second quarter and 3.3 percent growth in the third quarter.
The full budget forecast report from MMB can be found by clicking here.
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