ST. PAUL, Minn. (AP) — Minnesota will have a $1.5 billion surplus for the next two-year budget period, state officials announced Thursday, setting the stage for a spirited debate over taxes and spending in the legislative session that starts in January.
The healthy surplus gives Democratic Gov.-elect Tim Walz and the Legislature more room for new spending initiatives, tax cuts or some combination of both.
Minnesota Management and Budget projected the surplus for the fiscal period that starts July 1. MMB also said the state's budget reserve has grown to $2 billion, though legislators would have to change current laws to tap any of that.
Walz is due to release his budget outline by Feb. 19. He issued the following statement about this report:
Today, Governor-elect Tim Walz issued the following statement in response to Minnesota Management and Budget’s November Budget Forecast:
“Today’s budget forecast is a testament to the incredible work of Governor Mark Dayton. I am humbled to follow in his footsteps, and I pledge to continue his legacy of fiscal stability.”
“This forecast shows a strong foundation on which we can build One Minnesota. Our recent listening tour made clear that Minnesotans are hungry for a government that puts people before politics. They are ready to find common ground, tackle the challenges in their communities, and build a better life for everyone.”
“Our budget will reflect the priorities of the people of Minnesota. Under my leadership, Minnesota will be the education state. We will work tirelessly to ensure every child, no matter their race or zip code, receives a high-quality education. We will increase access to affordable health care. We will help provide local communities with the tools they need to ensure they aren’t just surviving, they are thriving.”
“I look forward to working across the aisle to further these priorities. Together, we can make One Minnesota a reality.”
The governor and lawmakers will get an updated budget forecast in February that will guide them through the end of the legislative session in May. Democrats took control of the Minnesota House in last month's elections, while Senate Republicans maintained their one-seat majority. The partisan split likely will force lawmakers and the governor to make compromises.
MMB said Minnesota's budget outlook remains sound despite slower growth expected through the budget period, which begins July 1. It said slower economic growth is projected to continue into 2023, resulting in a slowdown in revenue growth, lowering the projected surplus for that period to only $456 million.