STATEMENT FROM REP. POSTON ON NOVEMBER BUDGET FORECAST
ST. PAUL, MN—On Tuesday, Minnesota Management and Budget released the November forecast, showing a projected $188 million deficit due to lower-than-expected revenues based on assumptions about federal legislation and U.S. GDP and wage growth. The forecast also reflected $178 million in state spending on the federal Children's Health Insurance Program (CHIP), nearly all of which would be backfilled once CHIP is renewed at the federal level. Despite the uncertain forecast, Republican leaders touted Minnesota's strong economy, and anticipated stronger revenue estimates when the forecast is updated in February.
"Today’s report shows that despite a projected deficit, Minnesota’s economy remains strong with low unemployment, growing wages, and a growing state GDP," said Representative John Poston, R-Lake Shore. “I expect February’s updated budget forecast to show marked improvement for the state’s projected budget once the federal government finishes tax reform and approves its budget.”
Assumptions about federal legislation and U.S. GDP and wage growth contributed to lower-than-expected revenue assumptions. The forecast assumes that no tax bill will be passed at the federal level despite passage in both the House and Senate last week, and assumes 2.2% GDP growth in 2017 despite 3.1% growth in the second quarter and 3.3% growth in the third quarter.
The full budget forecast report from MMB can be found by clicking here.