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Budget surplus? This week's economic report to set tone for session

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How about that forecast?

No, not the one with the snow and cold. The one that will let us know how Minnesota's economic recovery is going and whether lawmakers might have a surplus to work with when they convene in St. Paul.

Minnesota Management and Budget plans to release its report on Thursday. As MPR reports, it will set the tone for the legislative session that begins in February. Lawmakers tell the network they're cautiously optimistic.

DFL House Speaker Paul Thissen says the first priority for any extra money will be paying off the state's debt to its schools, which is about $240 million. Senate Minority Leader David Hann says Republicans would like to see the repeal of three business taxes enacted last spring, but he doubts the surplus will be big enough for DFLers to agree to that, MPR reports.

Minnesota's IOU to its school districts started at $2.6 billion, which is what the state borrowed in the budget-balancing deal that settled the 2011 government shutdown. Earlier this fall the state put more than $600 million into buying down that debt.

If a surplus is more than enough to pay off the remaining $240 million, the Legislature may have some options about how to use the money. But Thissen tells MPR beefing up the state's reserve fund would be one of them.

A month ago budget officials said state revenue in October ran nearly even with their projections, coming up $2 million short on more than $4 billion in revenue.

Management and Budget issues two forecasts a year, but they come just three months apart in November and February. For an overview of the process, here's an explainer from Minnesota House Research.

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