AP NEWS

The Latest: Smaller projected surplus sets up battle lines

February 28, 2019

ST. PAUL, Minn. (AP) — The Latest on Minnesota’s shrinking budget surplus (all times local):

2:15 p.m.

Administration officials say slowing economic growth and a deepening worker shortage has shrunk Minnesota’s projected budget surplus to just over $1 billion. That leaves lawmakers nearly $500 million less to work with as they begin assembling the state’s next two-year budget.

Gov. Tim Walz and other Democratic leaders say the updated forecast shows the need for more spending on education, jobs and transportation, and stepped up efforts to attract workers from other states.

But Republican leaders say high taxes are the problem, and that tax hikes Walz proposes on gasoline and other items will only choke off growth and make Minnesota less attractive.

The updated forecast is now the starting point as legislative leaders set final spending targets for hammering out a budget before the session adjourns in late May.

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9:40 a.m.

Minnesota’s projected budget surplus has shrunk to just over $1 billion, leaving lawmakers nearly $500 million less to work with compared with the last forecast announced in December.

Minnesota Management and Budget said in a statement Thursday that the state’s budget and economic outlook have weakened since the previous forecast.

The agency says slower projected economic growth and lower tax collections have reduced the revenue forecast, though a slightly lower spending forecast offsets the overall reduction to the projected surplus.

Legislative leaders and Democratic Gov. Tim Walz’s administration will use the updated forecast to set final spending and revenue targets as they hammer out a two-year budget before the session adjourns in late May.

The administration plans to release further details later Thursday.