State of Minnesota is projecting a $1.3 billion budget surplus

Lawmakers will decide how to spend it in the next session.

Minnesota is projecting a $1.3 billion budget surplus heading into the 2020 legislative session.

Minnesota Management and Budget (MMB) on Thursday morning announced a "better than expected close to the last biennium," which coupled with a slight drop in spending has led to a $1.332 billion estimated surplus for the 2020-21 biennium.

A portion of that will be automatically placed into a budget reserve account to be used in the event of economic downturns, which as a result will swell to just under $2.4 billion.

With 2020 not a budget-setting year, it will mean the surplus will be all the more fiercely contested by lawmakers looking to allocate extra spending or tax cuts.

The Legislature is still split between the Republican-controlled Senate and Democratic-controlled House – with DFLer Gov. Tim Walz wielding veto power.

But with the 2020 elections coming up, with control of the House and Senate up for grabs, lawmakers will likely be looking for budget moves that boost their chances at the ballots come November.

Sign up: Subscribe to our BREAKING NEWS newsletters

That said, MMB notes that while the state's economy and revenue continues to grow, there remain "challenges" looking ahead to the 2022-23 biennium.

Among the things that have helped state revenues this year has been an increase in pull-tab gambling income, which will see the U.S. Bank Stadium reserve fund to increase from $98 million to $124 million in 2020-21.

But the surplus might have been higher if not for a court case that found against the state for the way it classified "resident" trusts for tax purposes.

As MPR reported in August, trust rules were tightened to stop state residents from shifting their trusts to lower-tax states to reduce their tax liabilities. But the court found that the state shouldn't be able to tax a trust with minimal ties to Minnesota but just so happened to have been created when the founder was resident in Minnesota.

The state on Thursday lowered its tax revenue estimates by $124 million as a result of the case.

Next Up

closed sign

What's open and closed in Minnesota on Thanksgiving Day 2020?

Most services will not be running on Thursday and unlike most years, many stores will be closed, too.


How a turkey's brush with celebrity in Bloomington came to a tragic end

DNR: if you care about wild animals, stop feeding them

TCF Bank Stadium

Saturday's Gophers/Badgers football game canceled due to COVID-19 issues

The Battle for Paul Bunyan's Axe will not take place for the first time since 1906.

coronavirus, Iowa

MN health officials don't think downside of COVID-19 peak has arrived

We could be in a trough between a series of waves, Jan Malcolm said.

covid-19, coronavirus

Wisconsin reports record 104 deaths from COVID-19 Tuesday

That's roughly 10% of the total in the nation in a 24-hour period.


Husband and wife sentenced for fraud scheme through their drywall firm

The Annandale pair bilked an insurance company out of more than $300,000.


4 pedestrians suffer life-threatening injuries after being struck by vehicle

Two vehicles crashed into a car that was on the side of the road after striking a deer.

Marcus Carr

Gophers season preview: New lineup, deeper bench, more questions

Mathew Goldstein takes a deep dive into the murky waters of the college hoops season.


Photos: ViV!R, Minneapolis' new Mexican cafe and shop, is now open

The team behind the acclaimed Popol Vuh have opened the cafe in the same space.


At Wiscoy Township's sole precinct, election judges ditched masks

Voter and Wiscoy resident Kaitlyn O'Connor took a photo of the judges after asking them to wear masks, she said


Minnesota's state budget has a projected $1.5 billion surplus

The Legislature and incoming Democratic governor Tim Walz will have some money to allocate.

Minnesota's budget surplus falls, but is still over $1 billion

It's down nearly half-a-billion from the November forecast.

Tim Walz

Minnesota's budget surplus grows, but uncertainty remains

Lawmakers have plans for the cash in what is an election year, but caution is being urged.

State Capitol

Minnesota to provide rare state budget update on Tuesday

It's an uncommon time of the year for a budget update, but follows an unprecedented period.

What is in Gov. Tim Walz's first budget proposal?

It provides a huge boost to education funding,

State Capitol

State projects $2.43 billion budget deficit in rare May forecast

In February, the forecast projected a $1.5 million surplus.