November forecast update

The November forecast projected a $1.5 billion budgetary balance for FY 2020-21. Roughly half ($720 million) of this balance was carried over from FY 2018-19. As a result, the structural balance for FY 2020-21 is approximately $870 million.

Since the November forecast was published, a monthly update has been released by Minnesota Management and Budget which reduced the November forecast revenue numbers by $102 million for the months of November and December. The rationale for the reduction is a projected decrease in annual growth related to equity values and rhetoric from the White House. Due to the timing of the publication the impact of the federal government shutdown was not factored into the forecast, but there is an expectation that the shutdown may have a modest drag on GDP.

The Legislature and Governor Walz will have a more concrete idea of the resources available for the upcoming session when the February forecast is released at the beginning of March.