With the seemingly constant stream of bad financial news we have seen lately in regards to MN and the nation- it was a pleasant surprise today to learn that Minnesota’s economists forecast a budget surplus of $876 million for the rest of the two-year budget cycle.
How did this come to pass? The 2011 fiscal year closed with revenues $358 million higher than expected and expenditures $205 million below previous forecasts. With projected revenues for the 2012-13 biennium expected to be relatively unchanged and projected expenditures anticipated to be $348 million less, this will yield a projected $876 million balance. Much of the expenditure reductions are from changes made in the area of Health and Human Services, particularly enrollment and cost trends in the state’s Medical Assistance programs.
This news comes after a four-year string of budget deficits in Minnesota. February 2007 was the last time that economists announced a projected surplus for the state, and that was around $1 billion. Since then, a sequence of shortfalls has drained reserves, forced reductions to almost every state service and caused elected leaders to borrow from public schools and private lenders. This surplus triggers a long-standing state statute which will direct the balance to the state’s cash flow account ($255 million) and the budget reserve ($621 million). If the surplus had been larger, the current statutes would have directed the additional dollars to buy-back the K-12 education shift. Despite these laws, we could still see a fight between the GOP legislature and DFL governor over how and whether to spend the surplus.
Minnesota Management and Budget Commissioner, Jim Schowalter had the following to say today on the surplus news: “This is obviously good news and a helpful break from recurring budget gaps. It’s also a reminder that Minnesota still has some significant strengths – above average economic performance and the discipline to quickly stabilize its finances. Future risk remains, but at least we now have a cushion.”
We will know much more when the February forecast is released in early 2012, as it is this forecast that is used for budgeting. However for the time being the state surplus is welcomed news for the disability community, given the extent to which disability services have been cut in past years to address state budget deficits.
- Christian Knights, Courage Center
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