Minnesota expects $876 million surplus; Gottwalt

Minnesota expects $876 million surplus; Gottwalt Click to Enlarge Photo:

Dec 1, 2011 at 10:15 am

ST. PAUL, Minn. (KNSI, AP) - Minnesota budget officials are estimating a surprise $876 million surplus for the rest of the state's two-year budget, easing fears of another bruising political fight just months after partisan deadlock over how to close the last budget deficit led to a partial shutdown of state government.

Predictions at the Capitol had been pessimistic, with red-ink estimates ranging from $500 million to $1 billion. But budget officials said revenues came in $358 million higher than expected and spending was $205 million below earlier estimates.

"Hopefully, you'll see continued improvement in the state's economy, but for now, we have a brief respite from the cycles of bad budget news," Minnesota Management and Budget Office commissioner James Schowalter said.

The forecast wasn't all sunny. It projected a deficit of $1.3 billion for fiscal years 2014-15.

The forecast said much of the surplus was also attributable to reduced state spending, particularly in the area of Health and Human Services. Just before Thursday's announcement, the House chairman of that committee, St. Cloud Republican Rep. Steve Gottwalt, said the surplus was not only a surprise, but a reaffirmation of GOP-backed efforts to reign in state spending.

"It's...a vindication that by tightening our belts and living within our means, we have in fact put state spending in a position where we can actually book a surplus. That's a very positive outcome for Minnesota," Gottwalt said.

While Gottwalt advocates the idea of using surplus money to restore some of the most painful cuts to health and human services program, he, along with Schowalter and state economists, said the state's windfall should also be used to protect against future budget downturns.

"I've always been one who advocates for us rebuilding a bit of a rainy day fund, so that we've got a cushion. Having a certain amount of money set aside to cushion us, that's a good business practice. That's also a good fiscal practice for the state of Minnesota on behalf of its taxpayers."

The forecast will be updated again in February, when it will be used to guide budget talks.

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