Revenue forecast to help plot fiscal course

02/28/2006

Officials await new numbers due today

BY PATRICK SWEENEY
Pioneer Press

A new revenue forecast today will reveal whether Minnesota state government faces the latest in a string of deficits or perhaps will enjoy a small budget surplus.

The forecast will determine whether lawmakers and Gov. Tim Pawlenty will be talking about increasing spending or looking for spending cuts during the legislative session that begins Wednesday.

State economist Tom Stinson, the man responsible for estimating Minnesota tax collections over the next 16 months, refused to say what the forecast will predict. But he said there have been no major changes in the state or national economies that would cause total general fund revenue to deviate much from the $31.3 billion that the state’s last forecast projected in November.

But Stinson cautioned: “Even little changes in the forecast look awfully big to some people.”

Because of state law, more than $1 billion in surplus revenue predicted in the November forecast has already been set aside and will not be part of any new surplus. That money consists of:

• $317 million the state carried forward from the last two-year budget cycle into the current biennium. That money was steered by law into a “tax relief account” that has no specific use.

• $701 million in anticipated surplus during the current biennium that Stinson and other state officials predicted in November. Current law requires the full $701 million be paid to school districts to repay money the state borrowed from the districts by delaying state aid payments to fix a previous budget shortfall.

But even after the $701 million is repaid, the state still owes $94 million to the school districts.

That means that, unless the forecast today predicts a new surplus of at least that $94 million, there will be no money available for new spending.

Lawmakers and Pawlenty, of course, will have the option of changing the law and using part or all of the tax-relief fund for spending, or changing the law and delaying repayment of the money owed to the schools.

But Pawlenty said last week he opposed reneging on the commitment to repay the schools, and some legislators have said they opposed using the $317 million for anything but tax relief.