Minnesota gets $336M revenue windfall
- Article by: RACHEL E. STASSEN-BERGER
- Star Tribune
- July 10, 2012 - 9:38 PM
A fresh portrait of state budget numbers gives Minnesotans some good news after years of gloom.
The state closed out the 2012 fiscal year with $336 million more in revenue than was forecast in February. Minnesota's manufacturing sector has bounced back after the recession, its health-care sector is growing and gains in its gross domestic product is the 15th-best in the nation.
The better-than-expected picture may give the state some relief from the bruising budget battles that brought years of cuts, fiscal gimmicks and a historic shutdown.
"We are not completely out of the woods at this point, but we can see the sunlight through the woods," said Rep. Greg Davids, R-Preston, who leads the House Taxes Committee.
According to the economic update, the state posted a $115 million increase in individual income tax collections over February's estimate, along with $28 million more than expected from estate taxes, $19 million more in deed and mortgage taxes, and another $19 million in property taxes.
But there are still a few clouds in the distance.
Minnesota Management and Budget Commissioner Jim Schowalter said the new numbers are good, but, "it doesn't mean that the state's financial problems have gone away." Much of the increase was one-time money, he said.
The nation's economy continues to give economists the shakes.
IHS Global Insight, the state's forecaster, "has turned slightly less optimistic since earlier in the year" about the nation's economic growth, the update noted.
"Most [economists] now expect the tepid growth rates observed over the last 18 months to continue through 2013," the paper said.
The economists have ratcheted back their projections for national economic growth through 2015. In February, when the state last received a detailed economic forecast, economists projected a national growth rate of 2.1 percent in 2012, 2.3 percent in 2013 and an average annual growth of 3.1 percent in 2014 and 2015. Now they have dropped those projections to just 2 percent through 2013 and an average of 2.7 percent in the following two years.
Forecasters say there is only a 15 percent chance of things being better than expected on the national scene and a 25 percent chance of worse news: a mild recession triggered by domestic policy mistakes or a worsening European crisis.
The economists' measured national outlook contrasts with their more cheerful expectations for Minnesota.
The state's gross domestic product is growing faster than the national average, creating some sharp contrasts.
"Nationally, GDP fell by 4.4 percent between 2007 and 2009 and then recovered to a level just .04 above its 2007 average by 2011," the forecasters said.
Meanwhile, by 2011, Minnesota GDP was above its 2007 level by 2.7 percent.
Nationally, manufacturing output still lags that of 2007, but Minnesota's manufacturers are producing 13 percent more than they were at the start of the recession.
House Majority Leader Matt Dean, R-Dellwood, said the manufacturing news is particularly pleasing.
More confidence in the economy and the bipartisan move to speed the permitting process may be helping buoy those numbers, he said.
The state will get a more detailed forecast, which includes spending as well as revenues, in November.
Rachel E. Stassen-Berger Twitter: @rachelsb
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