Hello from the State Capitol,
Lawmakers received some great economic news recently, as our economic analysts projected a $329 million state budget surplus for the rest of this current budget cycle. This is roughly $517 million more than the previous projection – a $188 million deficit - made in November.
According to the state’s economic analysts, rising general sales tax projections, up by $119 million, and corporate tax projections, up $131 million, are the top reasons for Minnesota’s budget surplus projection.
Last year hardworking Minnesotans benefited from the largest tax relief proposal approved at the state legislature over the past two decades. This $650 million plan included Social Security tax relief for senior citizens, a first-in-the-nation tax credit for college student loan payments, property tax relief for every small business owner, and improved dependent care tax credits for working families.
To me, this solid economic forecast almost one year later is proof that tax relief is working.
Also worth noting: Minnesota now has its lowest unemployment rate in 17 years. Our seasonally adjusted unemployment rate fell to 3.1 percent, 1.0 percentage point below the national rate and 0.9 percentage points lower than a year ago.
There are also fewer unemployed job-seekers than open positions across the state. The ratio of unemployed persons to job vacancies statewide has hovered between 1.0 and 1.2 for the last three years, but it is now less than one at 0.9.
Before session ends, lawmakers must determine how to allocate this $329 million surplus in order to balance our budget. From this point forward, I believe we should focus on plans to conform with the federal tax relief law as well as look for new opportunities to give tax relief to the middle-class.
Look for any final decision to be made in mid-May. But rest easier knowing Minnesota’s economy is in good shape, which is great news for every Minnesotan.
Have a good weekend,
Nolan