Minnesotans paid more than $1.3 billion in state taxes in November, about $2 million more than state budget officials predicted in its most recent forecast.
The November forecast, released last week, projects that lawmakers will have a $1-billion surplus with which to craft a budget for the 2016-17 biennium.
The Minnesota Management and Budget Office on Wednesday said that the monthly revenue report was in line with the overall budget and economic forecast from a week ago.
Individual income tax collections were $517 million, or 2.2 percent more than projected. Sales taxes hit their target, coming in at $432 million as previously expected.
Other form of revenue beat targets by $8 million. The state has taken in $7.3 billion for the 2015 fiscal year, about $2 million more than November projections.
Minnesota budget officials urge caution in interpreting revenue numbers, which can fluctuate wildly from month to month.
Minnesota lawmakers and the governor will have a nice cushion with which to craft a budget after the Minnesota Management and Budget Office on Thursday reported the state will see a $1-billion surplus.
The surplus, though expected, will set the table for the start of the upcoming budget process as Minnesota legislators figure out what to do with the windfall.
State budget officials said Thursday that the surplus is the result of higher tax revenues, mainly in sales and individual income tax collections, and reduced spending in health and human services. Moreover, the budget surplus from the 2014-15 fiscal year, which ends in June, was projected Thursday to be $373 million after diverting a portion of it to the state's budget reserve.
Budget officials said the drop in spending on health care is largely because of a different composition of enrollees receiving medical assistance.
State budget director Margaret Kelly on Thursday said that though the number of enrollees in medical assistance grew slightly from a previous forecast, the uptick of enrollees have been largely adults without children. Since that forecast, the rate of familes with children and individuals with disabilities enrolling in medical assistance has also dropped.
Since February, when the Minnesota Management and Budget agency published its last forecast, the state’s economy has expanded largely as projected, aided by stronger employment growth. The job gains have shrunk the unemployment rate to its lowest level in more than eight years — 3.9 percent.
Minnesota's economic outlook, however, was downgraded Thursday from the February report. State economist Laura Kalambokidis said that despite a turnaround in the labor market, wage growth is now projected to grow more slowly in 2014. Furthermore, it's likely that millennials burdened by high student-loan debt are not buying homes, which is reducing the rate of household formation.
Still, the budget forecast shows that the the state's fiscal picture has brightened considerably since February 2013, the last time the state faced a deficit, which stood then at $627 million.
Thursday’s forecast will guide the governor’s budget proposal, which Dayton has said he will present to the Legislature on Jan. 27. State lawmakers will craft their budget proposals based on a later February forecast, which includes updated economic data such as holiday retail sales and the country's fourth-quarter economic output.
Gov. Dayton has not yet gone into great detail on his priorities, but they are likely to include a request to fund child-care tax credits during next the next legislative session, set to begin next month.
“I’m not going to make any decisions until I see the revenue projections, but that’s still one I would give a high priority,” Dayton said Tuesday.
The tax credit would be intended to help families afford the cost of child care — a goal also supported by DFL legislators. The governor’s budget proposal may include funding requests for transportation, or a specific proposal may be introduced separately early next year. Dayton said during his re-election campaign that funding basic maintenance of the state’s infrastructure will be a key legislative priority.
The $1-billion surplus will likely make for a smoother session. Republicans are back in the majority in the House, but having extra money to work with would help the GOP, the DFL governor and DFL-controlled Senate create some common ground for compromise.
Dayton and legislative leaders on Thursday are expected to react to the complete report that was released at 11 a.m.
Net Minnesota tax collections were $1.687 billion in October, up nearly 5 percent from officials' projections in February, the Minnesota Management and Budget Office reported Wednesday.
Revenues collected from invidual and corporate income taxes and other miscellaneous revenues exceeded expectations for the month, officials said Monday. Sales tax receipts for October were down about $1 million.
For fiscal year 2015, tax collections are at $5.984 billion, up 0.5 percent from an earlier projection. Minnesota Management and Budget officials said in a statement that monthly revenue reports are preliminary and can vary wildly from month to month.
Minnesota 2020, a progressive think tank that DFL politician Matt Entenza founded seven years ago, is shutting its doors.
Stuart Alger, a Minneapolis attorney and board of directors chairman for Minnesota 2020, confirmed Monday that the board made the decision last week. Dave Colling, a veteran DFL operative who has frequently worked for Entenza, has been brought in to help the organization close down in an orderly fashion.
Minnesota 2020 delved into many public policy questions facing the state, producing lengthy and deeply researched reports on everything from transportation and energy policy to education and taxes. The group also frequently sponsored public forums featuring high-profile politicians and other civic leaders.
Alger said six to eight full-time employees would be laid off. He said most are writers, researchers and web specialists.
The organization is a 501c3 non-profit, and was funded in large part by donations from organized labor, foundations and private sources. "The funding just hasn't been there as it was in the past," said Alger, an attorney at Stinson Leonard Street in Minneapolis.
Entenza did not immediately respond to an interview request.
Entenza is a former state House minority leader from St. Paul. He founded Minnesota 2020 in June 2007, about a year after an unsuccessful bid for state attorney general.
Entenza tried to revive his political career in 2010 with a run for governor, but finished third in the DFL primary. He re-surfaced this year with a surprise primary challenge to DFL State Auditor Rebecca Otto, which he also lost.
With that last race, Entenza incurred the wrath of many in the DFL establishment, most notably state party chairman Ken Martin. But Alger said he had received no indication that anger toward Entenza led to the drop in donor support.
"We think Minnesota 2020 really provided a lot of good reliable content over seven years, and we're very proud of the work we've done," Alger said.
Minnesota House DFL leaders, locked in a tough battle to retain their majority, announced a plan to freeze public college and university tuition for two more years, until 2017, following a tuition freeze in 2014 and 2015.
“All Minnesota students deserve the opportunity to go to college and receive a degree – without finding themselves under a mountain of debt,” Speaker Paul Thissen said in a news release.
College-aged voters can be fickle, especially in non-presidential years, so DFL leaders may be expending extra effort to get them to the polls this year.
The plan won’t be free. Earlier this month, the University of Minnesota proposed a tuition freeze, in exchange for $127 million — or 10.6 percent — in extra state funding over the next two years, to pay for the tuition plan and other initiatives.
Minnesota State Colleges and Universities offered its own similar proposal: A tuition freeze in exchange for an extra $142 million.
The House DFL plan would also expand loan forgiveness to graduates working in high demand jobs in rural Minnesota, as well as debt relief to graduates working for ServeMinnesota, the state's AmeriCorps offshoot.
Asked how the freeze would be paid for, House DFL spokesman Michael Howard said legislative leaders are working on determining the cost and a plan to pay for it. "Freezing tuition would certainly be a significant investment, but the objective would be that a tuition freeze would come from a mix of additional state dollars and reduction in administrative costs at" the universities, he said.
Updated, with comments from House DFL spokesman Michael Howard on paying for the proposal.
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