Congress' Tax Plans Make Minnesota's Financial Future Uncertain

ST. PAUL, Minn. (AP) — Minnesota officials will soon get an update on the state's financial standing, but an ongoing effort by Congress to slash taxes means the numbers behind the surplus or deficit will provide little comfort or clarity.

The economic forecasts that help set the stage for legislative sessions are always a guessing game, balancing the constantly changing streams of tax revenues and government expenditures that can soar or sour with the national economy. But the potential for trillions in federal tax breaks looms large over Tuesday's economic update in Minnesota.

The Republican-controlled U.S. Senate narrowly passed a $1.5 trillion tax bill over the weekend that would reshape the tax code — cutting individual rates, slashing corporate taxes and potentially leaving states with a drastically different economic picture. The debate over tax breaks now heads behind closed doors for House and Senate negotiators to agree on a final package, with President Donald Trump pushing to get a bill signed by Christmas.

With few specifics set in stone, Minnesota Gov. Mark Dayton said Monday that any readout of the state's financial position would be "speculative at best." He's not laying out any budget plans for 2018 until at least March, after Minnesota gets an updated economic forecast.

"It's not going to factor in any of the provisions (of a tax bill) which nobody knows about, including the members that voted for it," the Democratic governor said of Tuesday's forecast.

The state's economic consultants indicated earlier this fall they were assuming Congress would not pass a tax bill in 2017, a change from prior expectations. It's unclear how Tuesday's estimate would factor in a possible tax bill.

The bulk of Minnesota's budget is already settled: After several years of budget surpluses, lawmakers passed a two-year, $46 billion budget last spring that cuts taxes by $650 million and boosts public school funding.

Dayton is entering his final year in office in 2018, looking to cement his legacy of boosting early childhood education options and improving the state's water quality. And lawmakers are facing major questions about financing the state's array of health care offerings.

But beyond the fiscal questions and constraints, Dayton and Republicans who control the state Legislature will enter 2018 with relations at an all-time low after a prolonged and expensive legal battle over Dayton's decision to zero out House and Senate operating budgets. The Minnesota Supreme Court ruled that veto was constitutional last month.

Dayton said the long feud with Republicans wouldn't change his legislative wish list.

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