Minnesota’s budget picture brightens in new forecast

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MINNEAPOLIS (AP) – Minnesota is now facing a $641 million projected surplus in its current budget, officials said Tuesday, while cautioning that the state is facing a projected $1.273 billion shortfall for the two-year budget period that begins July 1.

That’s a substantial improvement from state’s last budget forecast, which was released in May as the coronavirus pandemic was taking hold. At the time, Minnesota Management and Budget projected a $2.4 billion deficit in this budget cycle and a $4.7 billion shortfall in the next.

Minnesota Management and Budget said higher general fund revenues and lower expected spending resulted in the improved outlook.

“As the pandemic continues, economic challenges also persist,” the agency cautioned ahead of a detailed presentation set for later Tuesday. “Minnesota has 184,000 fewer jobs than in February and, while the economic downturn has affected all Minnesotans, unemployment has disproportionately impacted lower wage workers.”

Gov. Tim Walz said Monday that he hopes the new forecast will accelerate preparations for a special session that he wants to call as soon as possible to approve new aid for businesses and workers affected by his recent tightening of restrictions. Those moves are hitting the hospitality industry especially hard.

Walz told reporters that negotiations among legislators and his office were making good progress.

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