On Tuesday, Minnesota Management and Budget (MMB) released an updated budget forecast, which projects an estimated budget deficit of $2.426 billion for the 2020-2021 biennium. This is after a projected surplus of 1.5 billion in February of 2020, bringing the difference to almost $4 billion in two months. The updated forecast, which is used to guide consideration of spending bills at the legislature, anticipates dramatically lower revenues as a result of the coronavirus pandemic. In accordance with state law, the balance of the state’s budget reserve is $2.359 billion.

This update is saddening, though not surprising, considering that a large number of businesses were shut down by various executive orders from Governor Walz. There has also been increased government spending on emergency legislation, which was to keep our state running during the pandemic. People are not working and consumer spending is low, from a real or perceived lack of security.

I also want to be cautious with a bonding bill this year, because every $100 million in borrowing costs the state $142.72 million in debt service over the next 20 years. Our infrastructure is important, but we must do what we can to get Minnesota back on track. Finally, we are setting up a COVID-19 Economic Recovery Taskforce to bring the best people and resources together to rebuild the Minnesota economy.

Most importantly, we must rebuild our economy by re-opening the state soon. Further shutdown orders will decimate essential government services and the great quality of life Minnesotans are accustomed to. If we re-open safely and quickly, we can mitigate the long-term effects of this peacetime emergency.

Resources:

MMB Update: https://mn.gov/mmb/mmbhome/?id=430876

PDF: https://mn.gov/mmb-stat/budget/may-interim-budget-projection-document.pdf