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    Minnesota Budget Forecast Minnesota Budget Forecast: November 2010

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    Rachel E. Stassen-Berger
    The Minnesota budget forecast projects a $399 million surplus in FY 2011 but a large $6.188 billion shortfall in FY 2012-2013. Revenues are projected to grow more slowly than expenditures, driven partly by replacing expired federal stimulus funds. Spending is expected to increase rapidly by 27.5% over the biennium due to one-time budget cuts in FY 2011 and mandated funding shifts. To balance the budget significant policy and structural changes will be needed to address the ongoing structural imbalance between revenues and expenditures.

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    Minnesota Budget Forecast Minnesota Budget Forecast: November 2010

    Uploaded by

    Rachel E. Stassen-Berger
    661 views6 pages
    The Minnesota budget forecast projects a $399 million surplus in FY 2011 but a large $6.188 billion shortfall in FY 2012-2013. Revenues are projected to grow more slowly than expenditures, driven partly by replacing expired federal stimulus funds. Spending is expected to increase rapidly by 27.5% over the biennium due to one-time budget cuts in FY 2011 and mandated funding shifts. To balance the budget significant policy and structural changes will be needed to address the ongoing structural imbalance between revenues and expenditures.

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    The Minnesota budget forecast projects a $399 million surplus in FY 2011 but a large $6.188 billion shortfall in FY 2012-2013. Revenues are projected to grow more slowly than expenditures, driven partly by replacing expired federal stimulus funds. Spending is expected to increase rapidly by 27.5% over the biennium due to one-time budget cuts in FY 2011 and mandated funding shifts. To balance the budget significant policy and structural changes will be needed to address the ongoing structural imbalance between revenues and expenditures.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    661 views6 pages

    Minnesota Budget Forecast Minnesota Budget Forecast: November 2010

    Uploaded by

    Rachel E. Stassen-Berger
    The Minnesota budget forecast projects a $399 million surplus in FY 2011 but a large $6.188 billion shortfall in FY 2012-2013. Revenues are projected to grow more slowly than expenditures, driven partly by replacing expired federal stimulus funds. Spending is expected to increase rapidly by 27.5% over the biennium due to one-time budget cuts in FY 2011 and mandated funding shifts. To balance the budget significant policy and structural changes will be needed to address the ongoing structural imbalance between revenues and expenditures.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 6

    Minnesota Budget Forecast

    November 2010

    Minnesota Management & Budget December 2, 2010

    Budget Balance $399 Million in FY11 –


    $6.188 Billion Shortfall in FY 12-13

    ($ in millions) FY10-11 FY12-13


    Beginning Balance $447 $674
    Revenues 30,493 32,044
    Spending 30,266 38,591
    Reserves 275 275
    Forecast Balance $399 $(6,188)

    Minnesota Management & Budget 1


    Forecast FY 2010-11 Balance
    Now $399 Million
    ¾ May budget session left $6 million balance
    ¾ October special session added $191 million
    ƒ$231M of extended federal medical assistance
    funding, $38M for disaster assistance

    ¾ November forecast added $202 million


    ƒ$183M
    $183M savings in human services programs,$123M
    debt service savings
    ƒ$44M reduction to forecast revenues
    ƒ$9M to budget reserve from ‘excess surplus’ in the
    workers’ compensation assigned risk plan

    Outlook for Real GDP Growth Modestly


    Weaker Through 2013
    Half Year GDP Growth Real GDP
    Annual Rate $ Billions
    6 15000

    4.5 13750

    3 12500

    1.5 11250

    0 10000

    ‐1 5
    ‐1.5 8750

    ‐3 7500
    Feb Nov
    ‐4.5 6250

    ‐6 5000
    2008 2009 2010 2011 2012 2013

    Minnesota Management & Budget 2


    Minnesota Employment Is Recovering
    Faster than the U.S. Average
    Index
    Dec 2007 = 100

    102

    100
    US MN
    98

    96

    94

    92
    Jan 08 Apr Jul Oct Jan 09 Apr Jul Oct Jan 10 Apr July  Oct

    FY 2012-13 Revenues $904 Million Below


    Earlier Planning Estimates

    ($ millions) 2010-11
    2010 11 2012-13
    2012 13
    Income Tax $(314) $(471)
    Sales Tax 55 (119)
    Corporate Tax 199 (185)
    St t id Levy
    Statewide L 5 (3)
    All Other Revenues 11 (126)
    Total Revenues $(44) $(904)

    Minnesota Management & Budget 3


    Expenditure Forecast Reduced for
    Current and FY 2012-13 Biennium

    ($ millions) 2010-11 2012-13


    K-12 Education $48 $26
    Health & Human Svcs. (183) (111)
    Debt Service (123) (12)
    All Other 3 (11)
    Total Spending $(255) $(108)

    Disparity in Revenue Growth and


    Projected Spending Created Budget Gap

    ($ iin millions)
    illi ) FY10 11 FY12-13
    FY10-11 FY12 13 $ Ch
    Chg. % Ch
    Chg.
    Beginning Balance $447 $674
    Revenues 30,493 32,003 1,510 5.0%
    Spending 30,266 38,591 8,324 27.5%
    Reserves 275 275 --- ---
    Forecast Balance $399 $(6,188)

    Minnesota Management & Budget 4


    Major Factors Driving $8.3 Billion
    Spending Growth for FY 2012-13

    Replacing Federal Stimulus


    -- $2.3
    $2 3 billion
    School shifts that reduced FY 2010-11
    -- $1.9 billion
    School shift buyback in current law (FY 2012)
    -- $1.4 billion
    One-time reductions made in FY 2010-11
    -- $660 million
    K-12, HHS, and other forecast growth
    -- $ 2 billion

    Without Significant Changes, Revenue-


    Expenditure Gaps Will Continue
    Structural Balance
    ($ in millions)
    FY 2012 FY 2013 FY 2014 FY 2015

    Forecast Revenues $15,459 $16,545 $16,910 $17,685

    Projected Spending 19,774 18,817 19,648 20,030

    Difference ($4,315) ($2,272) ($2,738) ($2,345)

    Estimated Inflation (CPI) $336 $703 $1,162 $1,651

    Minnesota Management & Budget 5


    $6.2 Billion Shortfall is 16% of FY 2012-13
    Projected General Fund Spending
    Total Spending $38.6 Billion

    Health &
    Property Tax Human
    Services, Debt
    Aids &
    $11.9B, Service,
    Credits,
    30.9% $1.1B, 2.9%
    $3.5B, 9.1%

    All Other,,
    $3.5B, 9.1%
    K-12
    Education,
    $15.6B,
    40.5% Higher
    Education,
    $2.9B, 7.5%

    Minnesota Management & Budget 6

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