Minnesota budget officials say the state has a projected surplus of $1.08 billion for the 2014-2015 fiscal year. The numbers won’t be final until the February economic forecast, when lawmakers will be heading back to the state Capitol in St. Paul.
State law requires any additional dollars on the bottom line to go toward repayment of the K-12 school shift, which would get $246 million of the total balance. A state airport fund would also get $15 million of the total by state law, according to Minnesota Management and Budget (MMB), leaving a likely $825 million surplus for lawmakers when they return.
The forecast signals a major shift since three years ago, when lawmakers faced a deficit projected to hit $6.2 billion. The school shift, which sat at more than $2 billion after the 2011 budget deal, would be completely repaid under the forecast.
But there’s already a growing list of funding pressures on lawmakers if they return with a surplus, including a push from business groups to repeal three business-to-business taxes passed last session, an increase in transportation funding and a wage hike for group home workers.
In a Thursday morning press conference, MMB Commissioner Jim Schowalter drew attention to the fulfillment of a promise to pay back the school shift, and warned against any clamor to start spending the projected surplus.
“This forecast shouldn’t be mistaken for money in the bank,” Schowalter said. “We’re still only in the fifth month of a two year budget.”
Gov. Mark Dayton said credit for the good economic news was due to the state’s businesses, which have expanded and added new positions to the tune of 120,000 new jobs in the last three years. Dayton also thanked both of the last two Legislatures, highlighting Republican majorities’ willingness to cut spending in 2011, and the DFL’s moves to raise taxes on the wealthy earlier this spring.
If the present figures hold, Dayton said his priorities would be to eliminate all three business-to-business sales taxes passed during the 2013 session, which are worth an estimated $231 million in revenues over the biennium. He would also push for the state to conform with the federal tax code, which would knock another $205 million in taxes off the state’s bottom line. Combined, those tax cuts would leave $338 million in surplus money available “for other purposes,” though Dayton said he would hold off on making any specific proposals until after the February forecast.