Historic $7.7 Billion State Surplus Projected, Additional Surplus Projected in January, and more

Historic $7.7 Billion State Surplus Projected

As reported in December, the state has a $7.7 billion projected budget surplus. The $7.7 billion is in addition to $1.2 billion in federal COVID-19 relief funds directed to Minnesota that has yet to be designated for a specific purpose. Much of the projected surplus is being attributed to robust growth in income, consumer spending, corporate profits, and a major influx of federal funds for Fiscal Year 2021. It is the largest budget surplus in Minnesota history. Also contributing to the surplus are slightly lower state spending estimates in education, health and human services and other areas. With the Minnesota Legislature set to reconvene on January 31, 2022, expect to hear plenty of debate over how to spend the new funds and/or tax cuts.

Additional Surplus Projected in January

In addition to a $7.7 billion projected budget surplus announced in December, a quarterly review and economic update released in January by the Minnesota Department of Management and Budget showed the state tax collections continue well above forecasted levels. Earlier than expected tax payments have resulted in $362 million more in collections than was projected by state economists just two months ago. While these revenues will not be added to the projected record surplus yet, they indicate that tax collections continue to come in higher than expected.

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