Reinert: February Forecast Shows Signs of Overall Recovery
Today the Minnesota Management & Budget Office released the February budget forecast, which indicated an improved budget outlook for the 2012-2013 biennium. Current projections showed November’s $876M surplus balance has increased by $323M, totaling almost $1.2B. The improved outlook is primarily due to a gain of $230M of savings in the Medical Assistance (MA) program, where enrollment and costs for the early expansion of MA as part of the federal healthcare reform continued to be significantly lower than expected.
Despite a projected budget surplus, there is no net gain for the state’s balance sheet. Of the $323 million, $5 million of this money will go to fully restore the state’s budget reserve. The remaining balance will begin to repay the $2.7 billion K-12 school shift. This will buy back roughly 11 percent of the shift.
“A second positive forecast is significant,” said Senator Roger Reinert. “This is a continued sign that our economy is recovering. However, the state’s budget remains structurally unsound, and Minnesota continues to have major debts to repay.”
Although the total outlook for the 2014-2015 has slightly improved, Minnesota still faces a $1.1 billion budget shortfall, reflecting the state’s long-term structural deficit. Including the remaining $2.4 billion to K-12 schools, the total deficit is projected to reach $4.5 billion for the next biennium.