Minnesota's budget surplus has increased even more.
Minnesota Management and Budget (MMB) on Monday released an updated budget forecast that shows the General Fund surplus is now up to $9.253 billion for the current biennium, up from a projected $7.7 billion in November 2021.
"A higher income, consumer spending, and corporate profit forecast results in an improved revenue projection while spending is slightly lower in E-12 education and Health and Human Services," according to MMB.
However, MMB said there is uncertainty due to inflation and the geopolitical conflict in Ukraine that pose a risk to the budget and economic outlook. This latest projection was mostly compiled before Russia invaded Ukraine.
This record-setting budget forecast is what lawmakers at the state Capitol will use over the next few months to make decisions on spending. Over the past several weeks, Democrats and Republicans have revealed their ideas for how to spend the surplus.
In response to Monday's news, Gov. Tim Walz on Monday said with news of the higher surplus, he would like to see the Minnesota Legislature triple his proposed direct payment checks he previously proposed, so single Minnesotans would get $500 and married couples would get $1,000, and said he'd like to see Minnesotans get the checks before this summer.
The Democratic governor has proposed the aforementioned "Walz checks" as a way to get money directly to Minnesotans. He and fellow DFLers have proposed spending much of the budget surplus on social programs, such as new spending on paid family and medical leave programs, child care support, and money for frontline workers, among other programs that support workers and families.
Republicans, meanwhile, are calling for permanent tax relief for Minnesotans, saying they are over-taxed.
"Minnesota's record-setting surplus gives us more than enough resources for permanent and meaningful tax relief for Minnesotans — including an end to the social security tax and replenishing the unemployment trust fund," House Minority Leader Kurt Daudt, R-Crown, said in a statement Monday.
"There's never been a better time to give Minnesotans their money back as they struggle with record inflation, soaring energy bills, and rising gas prices."
The state figures released Monday found that average Minnesota household income increased by 8.4% in 2021, far outstripping the pace of inflation, which averaged 4.7% in 2021.
Senate Majority Leader Jeremy Miller, R-Winona, said Monday the increased surplus strengthens Republicans' argument for tax cuts for all Minnesotans, calling the $9.25 billion surplus "mind-boggling."
Walz said he's open to cutting income tax rates but he wants the highest-earning Minnesotans excluded from tax cuts.
Other lawmakers are urging caution, including saving some of the money in the surplus for the future when the economic outlook isn't so rosy.
“We have to be very cautious and very prudent with the surplus and I have no problem saving a lot of it if I had my way,” said Senate Minority Leader Melisa Lopez Franzen, DFL-Edina, according to MPR News. “But we certainly have a lot of different strains and different proposals being put up by different groups. And we want to make sure that we take care of Minnesotans first and make sure that we're ready for that next rainy day.”
Minnesota lawmakers also have $1.1 billion in federal COVID relief money to figure out how to spend.