Budget Forecast Released. It's really difficult to call anything that's happened during the pandemic good news (except for the recent news on progress toward a viable vaccination), but the state budget forecast released today qualifies as at least a pleasant surprise. When the pandemic hit in March, the worst was assumed (and for many Americans, it really has been the worst thing imaginable) and that the economy was going to tank. The stock market hit a low of 18,541.93 on March 23, but the trendline has been moving steadily upwards since albeit with a few fits-and-starts. Remember the presentation that Peter Leatherman from Morris-Leatherman gave to SEE membership in September when he pointed out that the responses provided by participants were far more optimistic than the ones provided in April. While the stock market is not a true measure of what is happening up and down the economy, I think in this instance it showed that the economic prospects of a large portion of the economy were not as adversely affected by the pandemic as once feared. Please don't take this as a dismissal of the true pain felt by the small business owners and low-wage employees whose lives have been absolutely decimated by the pandemic. As pointed out last week in the business press, large corporations have done well during the pandemic while small businesses, especially restaurants and service industries, have been crushed.
At any rate, Minnesota's budget situation is actually on the plus side of the ledger for the remainder of this fiscal year (which ends on June 30, 2021). The February forecast had state revenues at $48.8 billion. An interim forecast performed in May showed revenues down by $3.7 billion, but that has rebounded since to a loss of just $1.7 billion. While revenue was down from the February forecast, so was spending to the tune of $1.1 billion. Adding these--and several other variables together--and the state ends this fiscal year with a surplus of $641 million (see linked document for a more concise description). It is my guess that a considerable portion of this revenue will go towards a relief package currently being negotiated by Governor Walz and the Legislature which may be taken up at the expected December special session.
The budget picture for the next biennium is less rosy, as the estimates show a looming budget shortfall of nearly $1.3 billion. This would be reduced by any amount of the current fiscal year surplus that might be carried forward or if economic performance improves to the extent that revenues would exceed current projections. Given the likelihood of the shortfall remaining in excess of $1.0 billion, frugality may be the order of the session as the Legislature and Governor work to hammer out agreements over the various budget areas.
House Committee Chairs Named. The House named its committee chairs for the coming biennium last evening and, like the Senate, there will be a change in the chairs of an education-related committee. Representative Jim Davnie will remain as Chair of the Education Funding Committee and Representative Dave Pinto will remain Chair of the Early Childhood Funding and Policy Committee. Representative Ruth Richardson will take over as Chair of the Education Policy Committee. Representative Cheryl Youakim, Chair of the Education Policy Committee the past two sessions, will move over to chair the Property Tax Division of the House Tax Committee. Representative Paul Marquart will remain Chair of the full Tax Committee.
Link to Story on House Committee Structure/Chairs: House committee, division chairs named for 2021-22 biennium
Membership rosters for the House and Senate committees are in the process of being developed and should be released at some point in December.