This week was marked by the unveiling of the February 2022 Budget and Economic Forecast. Legislators will use this forecast to guide fiscal decisions for the 2022 session. Debate over how to spend the $9.25 billion surplus is expected to pick up in the coming weeks. The number of committee meetings this week decreased slightly from last week’s 93, down to 88; a total of 560 bills have been introduced. In addition to the usual Tuesday and Thursday floor sessions, the Senate convened on Wednesday at noon to process bills to be referred to their next committee.
February 2022 Budget & Economic Forecast Released
On Monday, Feb. 28, the Office of Minnesota Management and Budget unveiled the February 2022 Budget and Economic Forecast. The general fund surplus has increased to $9.25 billion, up from the $7.7 billion projected in December. While the projection is for the 2022-23 biennium, the state should still be at a surplus for 2024-2025. The legislature will rely on this updated projection to guide their fiscal decisions for the rest of the 2022 session. It’s important that legislators approach this projection with caution, as shifts in the U.S. economy and geopolitical conflict in Ukraine could still impact the general fund for the 2022-2023 biennium. In addition, much of the $1.15 billion projected in the February forecast is considered as one-time money.
Contributions to the surplus:
- Higher than expected income tax collection
- Increased consumer spending and sales tax collections
- Increased corporate profits
- Decreases in spending in E-12 education (down $158 million), less than predicted in November forecast
- Decreases in health and human services spending (down $108 million), less than predicted in November forecast
What to do with the surplus:
- Gov. Walz wants to triple his one-time rebate “Walz Checks” to $500 for singles and $1,000 for couples, said he is open to tax cuts
- Republicans want to pass permanent ongoing tax cuts
- Democrats want bigger bonuses for frontline workers