On Tuesday, the office of Minnesota Management and Budget (MMB) released their annual November economic forecast. The report, which details the state’s budget picture, projected a deficit of $188 million for the current biennium.
According to a presentation by MMB Commissioner Myron Frans, the forecast is driven by lower-than-expected revenues based on assumptions about federal legislation and U.S. GDP and wage growth. The forecast assumes the U.S. Congress will not pass a tax relief bill, and it assumes 2.2% GDP growth in 2017 – this is despite growth of more than 3% the previous two quarters.
In addition, the forecast reflected $178 million in spending on the federal Children’s Health Insurance Program (CHIP), a gap that would be closed once the funding is appropriated at the federal level.
“Despite the topline number, this forecast shows Minnesota is in pretty good shape,” said Senate Finance Chair Julie Rosen (R-Vernon Center). “Our economy is looking strong – unemployment is low, wages are projected to increase, and our economic growth numbers are healthy. This forecast doesn’t consider two important factors on the federal level, including the seemingly-imminent passage of a federal tax bill and funding for the Children’s Health Insurance Program. Once those are accounted for, our fiscal picture will look quite a bit different. Instead of reading anything into this forecast, it’s far more responsible to wait until February to get more accurate numbers.”