On Tuesday, the office of Minnesota Management and Budget (MMB) released their annual November economic forecast. The report, which details the state’s budget picture, projected a deficit of $188 million for the current biennium.

According to a presentation by MMB Commissioner Myron Frans, the forecast is driven by lower-than-expected revenues based on assumptions about federal legislation and U.S. GDP and wage growth. The forecast assumes the U.S. Congress will not pass a tax relief bill, and it assumes 2.2% GDP growth in 2017 – this is despite growth of more than 3% the previous two quarters.

In addition, the forecast reflected $178 million in spending on the federal Children’s Health Insurance Program (CHIP), a gap that would be closed once the funding is appropriated at the federal level.

“The new majority made it a priority to continue building on Minnesota’s economic strength by passing legislation targeted toward working middle class families,” said Sen. Bruce Anderson (R-Buffalo). “The November forecast shows that work is paying off. Wages are projected to increase. Exports are going up. Our unemployment rate is one of the best in the country. Consumer confidence is at a 17-year high. Things are in good shape.

“It’s understandable to see the $188 million deficit number and be concerned, but those concerns would be misplaced,” added Sen. Anderson. “The November forecast doesn’t include two key pieces of federal legislation — tax reform and funding for the Children’s Health Insurance Program – both of which appear to be nearly completed. The deficit will be erased once those bills become law, but even if there are hang ups, Minnesota has more than enough money in its rainy day fund to cover the deficit.”