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Minnesota budget forecasts record $7.7 billion surplus

(The Center Square) – Minnesota’s budget forecasts a $7.7 billion projected surplus for the fiscal year 2022-23 biennium.

The increased revenue derived from higher consumer spending, wage, salary income, and corporate profits than estimated last February. Individual tax receipts are forecasted at $2.7 billion (10.1%) more than the February forecast, thanks to higher tax liability estimates and higher forecast growth in wage and non-wage income.

A budgetary trigger injected $870 million into the Rainy Day fund, now at $2.6 billion.

The forecast noted 3.1 million workers nationwide dropped out of the labor force compared to February 2020, some of who might not return.

Gov. Tim Walz welcomed the surplus.

“Now we’ve got a remarkable opportunity to expand economic opportunity for all Minnesotans and move Minnesota forward in a meaningful and lasting way,” Walz said.

Walz laid out a wish list for spending, including paid family and medical leave, more money for early childhood programs, and lowering energy and health care costs. He aimed to focus spending on the middle class.

Minnesota Chamber President and CEO Doug Loon called on the Legislature to pay off Minnesota’s $1.1 billion outstanding debt to prevent a tax hike on companies statewide to replenish the Unemployment Insurance Trust Fund.

“An enormous budget surplus and overflowing government coffers is not the time to ask the public for more money,” Loon said in a statement. “Minnesota’s high tax rates already put us at a competitive disadvantage. With historic and recurring budget surpluses and the state budget set at 12% growth, it’s time for policymakers to take a serious look at Minnesota’s tax and spending patterns.”

When asked about paying off the debt, Walz responded, “We’ll get that one fixed,” but added no other details.

House Minority Leader Kurt Daudt, R-Crown, said the surplus opens an opportunity “to help make Minnesotans’ lives more affordable and prevent Gov. Walz and Democrats from raising taxes on struggling businesses later this month.”

“While government is flush with cash, Minnesotans are still struggling with inflation at thirty-year highs, gas prices up 50% or more, and sticker shock on their energy bills,” Daudt said in a statement.

The Coalition of Greater Minnesota Cities President and Luverne Mayor Pat Baustian called for “once-in-a-generation” spending opportunities.

“Cities across the state are facing the need to make expensive upgrades to their aging wastewater and drinking water facilities, along with other essential infrastructure,” Baustian said in a statement. “Shortages in child care and housing have plagued our communities for years, and have only gotten worse during the pandemic. Local Government Aid, which plays a vital role in restraining property taxes and lessening disparities between cities, has not kept pace with inflation and the increased financial pressures on cities. Now we know the state has the resources to tackle all these issues.”

Senate Minority Leader Melisa López Franzen, DFL-Edina, said the money should “ensure a fair recovery for all.”

“Today’s forecast is a sign that despite the challenges of this unprecedented pandemic, we are well positioned to invest in the people of Minnesota and ensure a fair recovery for all, especially those low-income and frontline workers who sacrificed the most during this crisis.” Franzen said in a statement. “This is an opportunity to address real issues facing families and workers throughout the state, like addressing the crisis in accessible childcare and lack of affordable housing. Above all else now it is up to us in the legislature to come together in the upcoming session and put the needs of working Minnesotans first.”

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