Minnesota state government received good news today, as the state's February economic forecast showed a $323 million surplus for the current two-year budget cycle. This is the second positive economic forecast in a row, confirming that the state's economy is growing, albeit slowly.
Under current law, the entire $323 million is already spoken for: $5 million will be sent to the state's budget reserve account, which has a statutory required level of $653 million, and the remainder will be directed toward paying off the $2.7 billion owed to school districts.
Minnesota Management and Budget (MMB) estimates that two thirds of the total surplus comes from reduced spending, particularly in the area of health and human services. Even more specifically, lower enrollment in the state's Medical Assistance program drove those reductions. The remaining one third is attributed to revenue updates.
The good news may be short lived however, as economic forecasts for the 2014-15 biennium show a $1.1 billion budget deficit awaiting the legislature in its next session.
More information on the February forecast can be found on the MMB Web site.