Minnesota’s $7.7 billion surplus could get even bigger
With an estimated $7.7 billion surplus projected for the next biennium (over $3 billion of which is already in the bank) and $1.1 billion in unspent federal COVID funds, the Minnesota state government is anything but short of cash. And according to newly released data from the MMB, the state might be seeing even more money as tax collections are proving more favorable than was forecast.
In their January Revenue and Economic Update published today, MMB reported that tax collections in November and December were 20.2 percent ($833 million) higher than what the November forecast predicted.
And while 56 percent of this surplus ($471 million) is from Pass-Through Entity Tax paid by S-corporations and partnerships and will have to be paid back as tax refunds, that still leaves $362 million extra that is due only to higher than expected tax collections.
Of that $362 million surplus, the majority comes from higher than expected income tax revenue collections. MMB reported that individual income tax collections were $242 million higher than forecast, and only $74 million was due to the aforementioned Pass-Through Entity Tax. Thereby, income tax collections exceeded the November forecast by a whopping $188 million.
This means that taking everything into consideration, if favorable economic conditions persist and future tax collections keep up with the November forecast, this $362 million extra in November-December collections would push the total surplus to over $8 billion.
With tax collections beating an already historic budget surplus, the case for tax cuts in Minnesota has never been stronger.