Thanks in part to new tax increases, Minnesota has an estimated $1.08 billion surplus for the remainder of the two-year budget cycle, according to a new projection.
State budget officials Thursday morning unveiled a comprehensive report on the state's economy that sets the stage for interesting new debates in the Legislature next year about budget priorities.
Some of the surplus money is spoken for – $246 million will be put toward repaying a debt to the state's K-12 school fund, borrowed during the recession, the Star Tribune reports.
Another $15 million will be funneled to the state airports fund, repaying money borrowed five years ago.
That leaves about $825 million in surplus, state budget officials said. DFL Gov. Mark Dayton said that if the forecast proves true, his preference would be to cut new business-to-business taxes and reduce taxes for the middle class, the Star Tribune reports.
What accounts for the billion-dollar boon?
The newspaper also notes that the outlook will make the 2014 Legislative session a lot more intriguing, with Democrats and Republicans already gearing up for heated debates on tax cuts and spending.
The Associated Press notes that an improving economy can create millions in savings, as people who turned to government assistance programs move back into the workforce and are less reliant on state programs. The AP notes that in last forecast, there were $80 million in lowered health and welfare costs.
The bright budget news stands in contrast to a grimmer federal budget picture, as well as outlooks in other states. Minnesota is “one of the leading states in the country in terms of economic performance,” Minnesota Management and Budget Commissioner Jim Schowalter said, the Star Tribune reported.
Several Minnesota neighbors have had positive budget news, too. Wisconsin had about $760 million in surplus for its fiscal year that ended in June. Iowa has a $600 million to $700 million surplus, state budget officials there said last month.
Before the announcement, the Star Tribune had asked budget watchers and other tweeters to guess how big the surplus might be – and most guesses were way below the actual figure.