April tax collections beat forecast by $1.15 billion
One big topic dominated the 2022 legislative session: what to do with the state’s historic budget surplus. While the session has ended with no agreement, a decision will still have to be made when legislators convene either in the special session or next year.
And from the look of things, that fight might get even bigger considering that tax revenues continue to beat the already historic forecast. According to the Minnesota Management and Budget, tax collections in April of this year were $1.15 billion over the forecast.
Net general fund revenues totaled $4.667 billion in April, $1.115 billion (31.4 percent) more than forecast. Net receipts from individual, sales, and corporate taxes for the month exceeded the forecast, while net other tax revenues were lower than expected. For fiscal year 2022, year to date receipts are now $25.069 billion, $1.781 billion (7.6 percent) more than forecast. We estimate that about $540 million of the fiscal-year-to-date variance reflects the timing of pass-through entity (PTE) tax payments and refunds.
Certainly, caution is always advised for monthly data. But records indicated that since November, tax revenues have been higher than forecasted for every month except February. Moreover, when tallied up, total tax revenues for the fiscal year beat the forecast by almost $1.8 billion.
What this means
Come decision time, the fight will likely be the same — how much of that surplus to give back and how much to use for more government spending.
But as previous American Experiment research has shown, other states have indeed faced surpluses. But the magnitude of those surpluses — especially among our neighbors — fails to match that of our state.
Compared to its neighbors, Minnesota has had an exceptionally large surplus. And our huge and growing surplus is yet another testament to our high taxes. If anything, these new numbers should convince legislators to prioritize returning more of the surplus — or better yet, the entire sum.