Minnesota Budget Forecast Will Set Up Rest of Session
ST. PAUL (AP) - Minnesota lawmakers and Gov. Mark Dayton find out Wednesday whether the state checkbook will hold on to a small positive balance or drops back into deficit.
The state budget office's February economic forecast is likely to set the tone for the rest of the legislative session, letting policymakers know if they have a cushion of money to replenish state reserves and begin paying off state debts to schools. A sizeable surplus could also stir support for a state-aided Minnesota Vikings stadium and for more borrowing for construction projects.
A deficit, though, could mean a replay of last year's contentious debate between Dayton, a Democrat, and Republican state lawmakers as they confronted a $5.5 billion budget shortfall.
Budget Commissioner Jim Schowalter said lawmakers shouldn't expect a major shift from the December forecast, which showed a significant improvement in the health of the state's general fund only a few months after Dayton and Republicans finally resolved that deficit.
"I think if you look at all the information that's already out there, the state's economic indicators, you'd say we're pretty much on course," Schowalter said.
The December forecast showed an $876 million budget surplus after income and corporate tax collections came in higher than expected; state health care costs came in lower than predicted; and the state's economy outperformed those of other states.
But Schowalter said that surplus is gone - by law, all but about $5 million was shifted to a budget reserve fund and the state's cash flow account, which were drained when the state had a deficit. That could set up a political dispute with Republicans when the new forecast is released. House Majority Leader Matt Dean said he and colleagues believe the previous surplus should be considered part of the new surplus.
"Our surplus is a surplus, and we're hoping it gets better," said Dean, R-Dellwood. For instance, he said a $100 million improvement in the November forecast should be viewed as a $976 million surplus; but Schowalter said that would properly be viewed as a $100 million surplus.
In any case, if there is extra money, Republicans and Democrats are in rare agreement that the first priority should be starting to restore more than $2 billion in state aid payments to schools that were delayed as part of last year's budget fix.
If there is a deficit, Dean said Republican committee chairmen and women have orders to start looking for cuts in the spending areas they oversee.
"What we've told our finance chairs to do is to be prepared for the worst," Dean said.
(Copyright 2012 by The Associated Press. All Rights Reserved)