Aha! I’m Nostroeconomicus! I’m not an economist (although I’ve taken quite a few economics courses) and I don’t play one on television (although I have been a game show contestant and I was “The Weakest Link”), but I distinctly remember when asked during my comments at the February SEE meeting what I thought the February forecast would look like I said I thought that the amount of one-time money (or the short-term surplus attributable to the current fiscal year and biennium) would rise while the budget forecast for the out-years (the coming biennium) would be down a bit. And “Voila!” there you have it. That’s what it pretty much looks like.
The amount of one-time money grew from $11.6 billion to $12.5 billion–an increase of approximately $900 million. The change in the economic performance forecast for the coming biennium added $600 million to the bottom line for next year, but these increases were offset by a $1.5 billion increase in spending. The net effect of all the moving parts is that there is an increase for the remainder of the current biennium and a dent in the amount of revenue estimated to be available for the coming biennium. Overall, the entirety looks the same at approximately $17.5 billion in available revenue with an increase in one-time dollars and a decrease in what can be invested in the base for programs going forward. This will likely cause the brakes to be pumped–just a bit–as the budget for the next biennium is constructed. We’re still likely to see considerable increases in the basic formula and a reduction in the special education cross-subsidy along with a number of other formula enhancements and promotion of programs aimed at improving student achievement and student mental health.
It does need to be noted that inflation was added to the budget forecast, which drives the number up to almost $19 billion.
Here is a link to the presentation from Minnesota Management and Budget outlining the February forecast: February Budget Forecast Presentation
Here is the more detailed document for those who like to dig more deeply into the numbers: February Budget and Economic Forecast
All in all, good news. From my vantage point as an amateur economist, I think many professional economists are still clinging to pre-pandemic models when trying to gauge where the economy will go next and I think it’s going to be a few years before we have worked through all the economic meanderings that were brought about by the pandemic.
House (Monday, February 27)
Senate (Monday, February 27)