$17.6 Billion Budget Surplus
On Tuesday, Dec. 6, the Minnesota Management and Budget (MMB) office released the much-anticipated state Budget and Economic Forecast. The twice-annual forecasts are essential information for Minnesota lawmakers to determine how much money they have to work with when creating the next two-year budget. The previous record-setting surplus of $9.25 billion announced in February 2022, has been dwarfed by the forecast $17.6 billion budget surplus for 2023. Much of this massive surplus has to do with a large portion of last year’s surplus remaining unspent, when legislators left almost $8 billion on the table when the 2022 legislative session ended. In addition to the surplus that remained from last session, the continued budget growth is credited to strong performance in income, sales and corporate taxes, the three main revenue sources for Minnesota. With this information in mind, Gov. Tim Walz must submit his budget recommendations by the end of January. Legislators will pay close attention to his proposals as they decide upon a final budget that must be in place by the end of June.
The Budget and Economic Forecasts released by MMB do not take inflation into account. The current rate of inflation (8.1%) is more of a factor for the 2023-2024 budget than ever in recent history. High rates of inflation impact the cost of funding current services and projects and may make it difficult to determine the cost of funding future services and projects. Legislative leaders and the governor have raised a desire to include inflation into the forecast, so look for more debate and conversation on this topic.