ST. PAUL, Minn. (AP) — Minnesota faces a potential $4.7 billion deficit in its next two-year budget due to continued economic fallout from the coronavirus pandemic, according to a new planning estimate announced Friday by the Minnesota Management and Budget office.

Management and Budget Commissioner Myron Frans said the pandemic has made economic conditions “extremely volatile.”

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A February economic forecast showed the state had a projected $1.5 billion budget surplus for the rest of this budget year, ending July 2021. But after the pandemic hit, a May update showed the state faces a $2.4 billion deficit this budget cycle. A local news organization reported that updated numbers for 2022 and 2023 show a continued slide.

Gov. Tim Walz in a statement that states nationwide are facing large budget gaps due to the pandemic and: “We have challenges ahead, but we will continue to make smart fiscal decisions and request aid from the federal government to help our state manage this difficult time.”

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Minnesota received more than $2 billion in federal coronavirus relief, but that money can’t be used for revenue collection gaps.

Minnesota has a budget reserve that has grown to nearly $2.4 billion over the years, with $350 million in a cash flow account. But as the deficit grows, lawmakers face potential budget cuts or tax increases to fill the gap.

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