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 by driven lower-than-expected revenues based on assumptions about federal legislation and U.S. GDP and wage growth. The forecast assumes the US 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.

“Any time Minnesota is forecasted to have a deficit I get concerned, but once you get beyond the top number, the details of this forecast get better,” said Deputy Majority Leader Sen. Jeremy Miller (R-Winona). “First, this forecast doesn’t factor in federal tax relief, which appears to be making progress. Second, it doesn’t factor in federal funding for the Children’s Health Insurance Program (CHIP), which is expected to come in before the end of the year. Finally, there are a number of positive economic growth indicators – our unemployment rate is low, wages are on the rise, and Minnesota’s exports continue to increase. Our economy has been growing at rates far above what this report projects. While the deficit is troublesome, I expect the February forecast will look quite different.”