Budget Issues
Minnesota’s $1.5 billion budget surplus projection is old news. Although difficult to precisely predict, our state economist says that the state will not get all the money we expected. According to the Minnesota Office of Management and Budget (MMB), if the severity of the recession caused by COVID-19 is half that of the Great Recession, the state could lose $1.5 billion in revenue from now through summer 2021. If the severity is equal to that of the Great Recession, the state could lose $3 billion in revenue.
“It’s almost like waiting for a reverse tsunami… waiting for a tsunami of revenues not to show up,” said State Economist Laura Kalambokidis.
As for money that we do have, the state will receive $1.87 billion from the federal stimulus bill, and Hennepin and Ramsey counties will receive an additional $317 million. Minnesota’s
budget reserve, or “rainy day fund”, currently holds $2.4 billion. Even in MMB’s current worst-case scenario, the budget reserve will be in the green with about $547 million remaining.
“The good news is we are in solid financial shape, we’re able to pay our bills but we will certainly have to balance our budget when we come out of this and there will certainly be a lack of revenues because of the shutdown,” said Gov. Walz.
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