In a pleasant surprise today, the Minnesota Management and Budget (MMB) office's November budget forecast showed an $876 million surplus for the 2012-2013 biennium. This good news appears to primarily be the result of decreased spending in the area of health and human services and increased income tax collections due to better than average employment numbers.
In the event of surpluses, statute currently requires repayment first to the state's cash flow and budget reserve accounts. Once those obligations are met, repayment of the recent school funding shifts would be next in line.
The Minnesota Legislature will receive another formal report card on the state's fiscal health in February 2012, and MMB staff did warn that the state's financial situation is fluid and this forecast still projects a $1.3 billion deficit for FY 2014-15. However, this announcement presents a possible opportunity for optimism following four years of multi-billion dollar deficits; it will certainly change the tone of discussions at the State Capitol.