Today is the day that the legislature waits for to make its economic plans and the news is good for the State of Minnesota. A surplus of $329 million has been projected by the State Economist and the outside forecasters for the FY 2018-19 biennium. The revenue forecast for the biennium is up $353 million compared to the November forecast. Higher forecasts for all the major tax types contributed to the change.
This positive reversal is in part because the November 2017 forecast was especially dire. At that point, Congress had not passed a huge federal subsidy to the Children's healthcare program (CHIPS). It was caught up in the Tax Cut and Jobs Act negotiations, in the continuing funding resolution, DACA, and some other contentious votes. It passed, and so there no longer had to be an assumption of that potential hole in Minnesota's budget
But it's also undeniable that tax cuts are having an effect, especially the Federal Tax Cuts and Jobs Act but also the modest relief passed in last year's tax bill. You remember that bill? The one Governor Dayton said he was blackmailed into signing and wanted a do-over. That one.
It's more important than ever that the legislature and the Governor work together this session to craft a conformity bill that gives Minnesotans tax relief so that the turnaround we see here continues.