Minnesota Surplus Thanks to Tax Reform

Date: March 14, 2018

 

Despite December’s budget forecast projecting a $188 million deficit in the state of Minnesota, there is now a $329 million projected budget surplus.

The surplus has been credited to the Tax Cuts and Jobs Act tax reform, as well as Congress’ recent reauthorization of funding for the Children’s Health Insurance Program that decreased the state’s obligations by $225 million, according to the Star Tribune.

“The Dayton Administration’s announcement of a $329 million budget surplus shows that not only is our economy moving in the right direction, but that the $648 million in tax relief passed by the legislature last session increased economic growth. It is clear: more money in the pocketbooks of Minnesotans leads to a more prosperous state and economy,” said Sen. Paul Anderson in a press release.  

The forecast “puts us in a very good position to meet the priorities we set forward,” House Majority Leader Joyce Peppin, was quoted as saying by the Star Tribune.

Although the surplus is about 1 percent of the state’s total budget, there is still a lot of needs that Minnesota must look at. The state’s legislature has not decided how to use the surplus just yet. On average for the past few years, the state had $1 billion-plus sums.

On the docket is an infrastructure bonding bill, as well as the adaption of the state tax code so that it works with the federal tax reform, fixing the vehicle licensing and registration system, improving school safety, and the underfunded public employee pensions.

The latest Department of Revenue estimate shows that if the state successfully matches the new federal tax cut then the state will have an additional $460 million, according to the Associated Press.

According to the Star Tribune, state economists have projected a $251 million surplus for the biennium budget cycle, from 2020 to 2021. The budget office has predicted general sales tax revenue for the next budget cycle will be $119 million more than they said previously in December’s forecast.  

Governor Mark Dayton, who is in his last year of office, will present a detailed budget proposal in March.

Related Content: Small Business News | Economy | Minnesota | State

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