November Budget Forecast Released; $188 Million Deficit Projected
Commissioner Myron Frans, from Minnesota Management and Budget (MMB), announced today a $188 million projected deficit for the remainder of the fiscal year 2018-19 biennium. As the first budget forecast since the 2017 legislative session, the November forecast sets the table for the 2018 legislative session and provides a general framework for the last legislative session of Gov. Mark Dayton’s term of office. The forecasted deficit is estimated to grow to $586 million in the 2020-21 biennium.
With federal negotiations on issues of health care, tax reform, and the federal budget ongoing, state officials were quick to note that, “considerable uncertainty remains about what U.S. policy changes will be enacted and their impact on the economy” and that the February 2018 forecast will provide additional guidance. MMB staff cited slowed economic growth nationwide, uncertainty of the impacts of federal tax reform and the various budget and tax bills passed during the 2017 legislative session as contributing to the deficit. This time last year, MMB projected a $1.4 billion surplus – that estimate grew to $1.65 billion in February 2017. The state currently has approximately $2 billion in reserves.
The November forecast also provided additional insight to a number of trends in the Minnesota economy. State economists noted continued growth in Minnesota’s average wage income –average income grew 1.4 percent in 2016 and 2.4 percent in 2017 and, based on economic trends, is expected to grow 3.2 percent in 2018 and 3.6 percent in 2019. The economic forecast also noted a 0.7 percent decrease in unemployment bringing the state’s unemployment rate to 3.3 percent on a seasonally adjusted basis (approximately 0.8 percent lower than the national rate). Finally, MMB noted a continued shortage of single family homes for sale and a corresponding increase in prices of approximately 6.8 percent.
Two Special Elections Set for February
Gov. Dayton also announced this week that special elections for two currently or soon-to-be vacant legislative seats will be held on Monday, Feb. 12, 2018. The special elections follow the resignations of state Sen. Dan Schoen (DFL-St. Paul Park) and state Rep. Tony Cornish (R-Vernon Center) amidst allegations of sexual harassment. The Senate special election is likely to garner the most attention as it provides Senate Republicans an opportunity to grow their narrow 34-33 majority while retaining the seat is essential for Senate Democrats in their attempts to regain the majority. Additionally, experienced legislators including former Republican state Rep. Denny McNamara and former Democrat state Rep and current Washington County Commissioner Karla Bigham are seeking the seat.
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