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The budget surplus can largely be attributed to a $230 million decrease in spending, mostly in lower-than-anticipated enrollment in Health and Human Services programs. The state also took in about $93 million more in revenues than anticipated, state budget officials announced on Wednesday.

Forecast: Minnesota has a $323 million budget surplus for biennium

MMB Commissioner Jim Schowalter presents the economic forecast at a Captiol news conference Wednesday (Staff photo: Peter Bartz-Gallagher)

The latest economic forecast puts Minnesota an additional $323 million in the black for the remainder of the 2012-2013 biennium.

The added surplus was due largely to a $230 million decrease in spending, mostly stemming from lower-than-anticipated enrollment in the state’s early Medicaid expansion under the federal health law for single adults. The state also took in about $93 million more in revenues than anticipated, state budget officials announced on Wednesday.

Despite a desire from lawmakers to use the money to push major policy initiatives sought this session, the surplus already is spoken for under current law. The first $5 million will be used to replenish the state’s budget reserve, bringing the emergency fund to a total of $653 million.

The remaining $318 million will be used to begin repaying more than $2 billion in state aid payments to school districts, $750 million of which was added to the tab as part of last year’s budget compromise between Gov. Mark Dayton and GOP leaders of the Legislature. The first $200 million of those payments are set to go out to districts March 15.

The last economic forecast in December showed an $876 million budget surplus, but by law that money has already been used to fill the state’s cash flow account and budget reserve fund.

“Overall the picture is a positive one,” MMB Commissioner Jim Schowalter said at an afternoon Capitol news conference, adding that the state still faces a $1.1 billion budget deficit in the 2014-2015 biennium (down from about $1.3 billion), a figure that does not include the remaining K-12 shift debt, inflation or other property tax shifts. “The fiscal issues that face this state are not resolved by this forecast or the previous one.”

State Economist Tom Stinson says the biggest unknown is federal action on fiscal policy and the continued implementation of the federal health care law. President Barack Obama and Congress face tough decisions on the Bush tax cuts and other fiscal issues that, depending on the outcome, could lead to a “significant drag” on the state’s economy in 2013.

Dayton cautioned that, even with the additional surplus, the state will still owe school districts across the state $2.4 billion in delayed payments. “We’re a long ways from being solvent and we have the responsibility to continue on this course of becoming ever more so,” Dayton said.

Republican legislative leaders focused more on the state’s positive financial direction. “Let’s keep this going,” said Senate Majority Leader Dave Senjem. “Let’s work together. Let’s keep the momentum going. Let’s push forward.”

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