ST. PAUL – A new economic forecast for Minnesota projects a state record $7.7 billion budget surplus for the next two-year budget cycle, a $9 billion turnaround from one year ago.
Minnesota Management & Budget issued an updated forecast Tuesday. It indicates “strong growth in income, consumer spending and corporate profits drove extraordinary revenue growth in FY 2021, and higher tax receipts to date in FY 2022 combine with an improved outlook for income, consumer spending and corporate profits to raise the revenue forecast for the current biennium.”
State Rep. Lisa Demuth, R-Cold Spring, said this presents an opportunity to provide Minnesotans with meaningful tax relief during the 2022 session.
“Minnesotans have been through so much financial adversity the last couple of years, and we need to recognize that as we consider how to best use these surplus dollars,” Demuth said. “This surplus represents an overpayment by taxpayers, so let’s put these dollars back in their hands. All areas of tax relief should be up for discussion, including reducing the excessive taxes our seniors pay on Social Security. I look forward to working on solutions to put this surplus to best use.”
Of immediate concern, Demuth said the surplus dollars should be used to spare Minnesota businesses from suffering a tax increase that is scheduled to land Dec. 15. Record-setting unemployment claims depleted Minnesota's Unemployment Insurance Trust Fund, resulting in a debt of more than $1 billion to the federal government that is coming due.
“Minnesota is one of only 10 states that has not acted on this issue and, because of that, Unemployment Insurance tax rates are set to rise 15 percent or more,” Demuth said. “This is a problem that needs to be corrected, especially with the state sitting on nearly $8 billion in surplus funds.”
The MMB report also indicates the improved budget forecast “triggers a statutory allocation to the budget reserve, leaving the reserve balance at $2.656 billion. While economic uncertainty and the pandemic pose significant risk to the forecast, the improved outlook carries into FY 2024-25 planning estimates.”
The $7.7 billion surplus follows a $1.3 billion shortfall projected in December of 2020 and a $1.6 billion surplus predicted last February.
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