Minnesota Management and Budget officials will release their newest snapshot of the state economy and budget on Dec. 5.
The twice-annual budget forecast gives state officials and legislators the most up-to-date look at the state economy and sets the projected budget surplus or deficit.
Minnesota Management and Budget Commissioner Jim Schowalter and his staff keep the forecast a closely-held secret until release day.
The state has emerged from the worst recession since the Great Depression, but the partial federal government shutdown and other financial uncertainty in Washington, D.C., could have been a drag on Minnesota’s economy.
Minnesota property tax rates could increase again next year, in spite of the $2.1 billion tax bill that was supposed to give homeowners a break.
The Minnesota Department of Revenue released preliminary property tax levy rates Tuesday that showed the state's cities, counties, townships, schools and special taxing districts planning across-the-board tax increases. The actual rates will not be released until February.
In July, Revenue had predicted that state property taxes would decline by $121 million in 2014 -- the first drop in a decade -- as communities took millions of dollars in local aid from the tax bill and passed at least some of it along to homeowners.
Some communities -- including Minneapolis and Dakota County -- are planning property tax cuts in 2014. But other communities, battered by recession and budget cuts, may opt to find other ways to spend their windfall from the state.
"We're going to have to wait and see what the cities and counties do," said Revenue Commissioner Myron Frans. "Some cities and counties are really trying to return some of this money for property tax (breaks) and some are fixing potholes and other things."
The November numbers are preliminary and the state won't have the final property tax numbers until the communities lock in their 2014 rates. Until then, Frans said, the state is encouraging local governments to pass at least some of the tax savings along to homeowners.
"Between now and then, the state is "encouraging them to look hard at their budgets here in the next three or four weeks," Frans said, "and use the money that we provided ... to reduce their levies if they can."
The early numbers show 2.1 percent property tax increase among Minnesota cities, 1.5 percent among counties and 2.1 percent among townships.
Minnesota school tax levies were set to decline by $60 million in the coming year, Frans said, but voters approved another $120 million in school levies.
"I'm still optimistic," Frans said. "The key for us is, we're watching these preliminary numbers, we want to make sure the cities and counties take a careful look and make sure we use the tools we gave them to...do what they can to provide property tax relief."
Those tools from the state included provisions in the tax bill that eliminated $129 million worth of sales taxes to cities and counties; $130 million worth of increased aid to local governments and increased aid to schools.
Communities will report their final property tax levies to the state in December and those numbers will be announced in February
Minnesota’s tax collections in October beat expectations by more than $56 million.
The Minnesota Department of Revenue took in $1.6 billion for the month, about 3.6 percent higher than estimated.
Income tax collections came in at $718 million, about $30.3 million more than budget officials estimated.
Sales tax collections were $455 million, beating targets by 4.4 million.
The state took in $63.9 million in corporate income taxes, up $1 million over estimates.
Other revenue came in $20 million over estimates, at $362 million.
Budget officials warn not to read too much into monthly revenue statements. They can vary wildly based on a range of factors, including timing of tax payments.
Minnesota taxpayers will pay $60,000 in legal fees for those who successfully fought an executive order by Gov. Mark Dayton calling for a unionization vote of home child care providers.
The plaintiff’s convinced the court that the governor exceeded his constitutional authority when he called for the unionization vote two years ago.
“This fee payment illustrates that the real extremist in the child care unionization scheme is the governor, who ignored the constitutional limitations on his own authority to do political favors for his union friends,” said plaintiff Becky Swanson. Dayton did it at the expense of “us self-employed child care providers who resisted this overreach.”
A spokesman for governor Dayton said the plaintiff’s originally wanted $214,000 to pay for legal fees and costs, but the governor’s staff negotiated the the amount down to $60,000.
“If anybody drove up the costs for taxpayers, it was the plaintiffs and not the governor,” said Dayton spokesman Matt Swenson
Democrats and Republicans in the Legislature have fought bitterly for years over efforts to unionize 4,300 home child care workers who get state subsides. The unions pushing the measure argue they have the muscle to help home child care workers secure better reimbursement rates at a time when state leaders are relentlessly trying to trim costs.
Republicans said the measure would merely strengthen unions from the increased dues they would collect and drive up government costs through the higher reimbursement rates.
“This is a victory for the hardworking child care providers of Minnesota,” said Rep. Mary Franson, R-Alexandria. “Governor Dayton’s attempt to unilaterally impose a union election on child care providers needlessly wasted $60,000 of taxpayer dollars .... Now the taxpayers are on the hook to clean up his mistake.”
After a judge threw out Dayton’s executive order, the newly-elected Democrat-controlled Legislature passed a measure calling for a similar unionization vote for state-backed home child care workers and home health aides. Dayton signed the measure into law.
A group of home child care operators filed a new lawsuit to block the vote.
Minnesota taxpayers contributed $4.08 billion to the state budget since July, about $2 million less than projected.
The state took in more from personal income taxes and sales taxes than budget officials predicted.
Minnesota workers contributed $2.1 billion in income taxes, about $27 million more than state officials projected. Consumers paid $1.1 billion in sales tax, about $46 million more than expected.
Corporate income taxes came in at $342 million, down $11 million from estimates. Other revenue accounted for $457 million, about $64 million below projections.
This the first budget snapshot since new tax hikes on high earners and a menu of sales taxes on business-related services kicked in.
State budget officials expected those new taxes to raise about $240 million in the first three months of the year. Actual tax collections for the quarter exceeded last year’s levels by $336 million, up 9 percent over the same period of the last fiscal year.
Democrats who control the Legislature said the revenue numbers are proof the state continues heading the right direction, noting strong recent job-creation numbers and high rankings from Forbes Magazine for the state's business climate.
"This news comes just as we are seeing other clear signs that Minnesota is continuing to make progress," said House Speaker Paul Thissen, DFL-Minneapolis. "Republicans seem so desperate for Minnesota's economy to fail that they are ignoring reality. If they are serious about improving Minnesota's economy they should be urging their counterparts in Washington to end the gridlock and get back to work. Right now the biggest threat to Minnesota's momentum is the current federal government shutdown forced by Republicans in Congress.
Republican said Minnesotans are just starting to see the fallout from the DFL-led tax increases of more than $2 billion.
The new DFL budget "forces hardworking taxpayers to pay more when they can least afford it for excessive government spending,” said GOP Rep. Jenifer Loon, a deputy House minority leader from Eden Prairie. “The simple fact is our state spending is far-outpacing our state’s economic growth.... The road to a healthier economy in Minnesota just got steeper."