State revenue continues to outpace forecast

"MN Budget"

06/13/2006

May collections come in 11.5 percent higher than predicted

BY PATRICK SWEENEY
Pioneer Press

Minnesota revenues were 11.5 percent — or $110 million — higher than previously predicted in May, the state Finance Department announced Monday.

“This is wonderful news,” said Rep. Jim Knoblach, R-St. Cloud, chairman of the House Ways and Means Committee.

Since the state’s last revenue forecast in February, total collections over the past four months have been $265 million higher than the forecast projected.

“It continues the trend since the February forecast of positive news,” said Finance Commissioner Peggy Ingison.

Half of the four-month increase is due to higher than predicted corporate-tax collections. Ingison warned that number may be inflated because some companies delayed filing for tax refunds they have coming to them because of a June 2005 state Supreme Court decision.

Ingison warned that monthly collections fluctuate significantly, but she called the May receipts “good news” and pointed to a big jump in collections from the individual income tax, Minnesota’s biggest revenue source.

The May income-tax collections were 17 percent higher than predicted in February, and Ingison said it now appears likely that total income taxes paid by Minnesotans on their 2005 earnings will be up from the forecast.

On the other hand, May receipts from the sales tax, the state’s second-biggest revenue source, were 6 percent, or $22 million, lower than anticipated in February.

Knoblach said he expected the state’s next revenue forecast in November would predict a surplus for the current budget cycle, which runs through June 2007.

In another report Monday, the Finance Department said new spending approved by lawmakers and Gov. Tim Pawlenty in the legislative session that ended last month sliced about $440 million off a $1.1 billion budget surplus predicted for the fiscal period 2008-09.