Minnesota faces large $4.7B deficit
ST. PAUL (AP) — Minnesota faces a potential $4.7 billion deficit in its next two-year budget due to continued economic fallout from the coronavirus pandemic, according to a new planning estimate announced Friday by the Minnesota Management and Budget office.
Management and Budget Commissioner Myron Frans said the pandemic has made economic conditions “extremely volatile.”
A February economic forecast showed the state had a projected $1.5 billion budget surplus for the rest of this budget year, ending July 2021. But after the pandemic hit, a May update showed the state faces a $2.4 billion deficit this budget cycle. The Star Tribune reported that updated numbers for 2022 and 2023 show a continued slide.
Gov. Tim Walz in a statement that states nationwide are facing large budget gaps due to the pandemic and: “We have challenges ahead, but we will continue to make smart fiscal decisions and request aid from the federal government to help our state manage this difficult time.”
Minnesota received more than $2 billion in federal coronavirus relief, but that money can’t be used for revenue collection gaps.
Minnesota has a budget reserve that has grown to nearly $2.4 billion over the years, with $350 million in a cash flow account. But as the deficit grows, lawmakers face potential budget cuts or tax increases to fill the gap.