Minnesota Management and Budget (MMB) has released the November Budget and Economic Forecast, projecting a $1.33 billion surplus for the current biennium (FY20-21). While the upcoming legislative session is not a budget session, the forecast helps frame discussion of a bonding bill and a supplemental budget in 2020.

Gov. Walz and MMB Commissioner Myron Frans used the forecast to stress the importance of the Legislature passing a large bonding bill this coming session. Gov. Walz mentioned the scope of the $5.3 billion worth of bonding requests that state agencies and local governments have submitted, while Frans said that Minnesota’s AAA bond rating places the state in a strong position to afford a large bonding bill.

The forecast also revealed that Minnesota will be able to reach its budget reserve target for FY20-21 of $2.359 billion. However, that milestone could be fleeting as the budget signed into law this past spring includes a $491 million shift next biennium (FY22-23) out of the budget reserve to cover general fund spending, which will bring the reserve below its target for FY22-23.

Senate Majority Leader Paul Gazelka (R-Nisswa) said in response to the forecast that he hopes to fully exempt Social Security benefits from taxation, while House Minority Leader Kurt Daudt (R-Crown) suggested the coming surplus would allow Minnesota to eliminate the health care provider tax that was at the center of last session’s final budget negotiations. In a joint statement, House Majority Leader Ryan Winkler (DFL-Golden Valley) and Senate Assistant Minority Leader Susan Kent (DFL-Woodbury) noted that when you add certain inflationary costs to the forecast, the state will have a deficit in the next biennium and thus policymakers should proceed with caution.

You can find the full forecast on MMB’s website.