Minn. Revenues Exceed Projections By $463M
ST. PAUL, Minn. (AP) — Minnesota’s tax revenues for the budget year that ended June 30 came in $463 million ahead of forecast, state officials said Wednesday, and that means more money will be on its way to schools.
Seventy percent of the extra revenue came from higher-than-expected individual income tax payments, Minnesota Management and Budget said in its quarterly revenue update.
Some of that money was attributed to stronger-than-expected economic growth, but the department said it believes much of it came from wealthy taxpayers shifting income from future years into 2012 to beat anticipated hikes in income and capital gains taxes, yielding a one-time gain.
Still, Gov. Mark Dayton said the report was “great news” for education because a bill he signed last session requires the state to use any budget surplus to accelerate repayment of $874 million owed to local school districts. Previous legislatures effectively borrowed from school districts by shifting payments into later fiscal years to patch holes in the state budget.
“Our state’s strong economic growth has enabled us to work our way out of previous budget deficits and repay most of what we owed our school districts,” Dayton said in a statement. “More work remains, but we have made important progress.”
Democrats who regained control of the Legislature from Republicans in last November’s elections were quick to claim credit for the money that will flow back to schools.
“Paying back the debt previous legislatures piled up on our schools was a top priority for House Democrats from day one. We mandated in our budget that repayment be accelerated and today that commitment paid off,” House Speaker Paul Thissen said in a statement. “This is good news not only for Minnesota kids, but for a stable state budget and a stronger economic future in Minnesota.”
Exactly how much money the districts will get has yet to be determined. The Dayton administration has until Sept. 30 to estimate the closing balance on the fiscal 2013 budget, which will reflect both final revenue figures and whether state spending finished ahead or behind projections.
Looking forward, Minnesota Management and Budget said in its report that the economic outlook for the current two-year budget period, which began July 1, is much the same as it projected in its February budget forecast. Employment reports show good job growth, housing is rebounding, auto sales are up and consumer sentiment is back in its normal range. But the department said real economic growth continues to be disappointing and most forecasters expect slow growth to continue in the second half of 2013.
The next quarterly revenue update is due out in October.
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