by Scott McClallen
Minnesota is facing a grim next few fiscal years.
Minnesota Management and Budget (MMB) Commissioner Myron Frans on Friday warned legislative leaders of a $4.7 billion projected revenue shortfall for fiscal years 2022-23 after restrictions put in place to slow the spread of COVID-19 caused tax revenues to plummet and costs to increase.
The revenue update confirms the May 2020 biennium’s projected $2.4 billion deficit.
The updated report says Minnesota’s net general fund receipts for this fiscal year were about $58 million less than the May projection.
Frans also announced the state is proceeding with August bond sales for cash to keep current construction projects on track.
“Today’s revenue update gives us more information about the budget problems we need to solve during this current biennium and the next,” Frans said in a statement.
“The planning estimates for 2022-23 will help decision-makers begin the budget planning process as we continue to respond to the pandemic. In keeping with our sound fiscal management principles, the August bonds sales will save taxpayers’ dollars with our ability to access lower interest rates.”
The state has a nearly $2.4 billion rainy day fund, and about $600 million in unallocated federal Coronavirus Relief Funds, MMB spokesman Chris Kelly told The Center Square.
Gov. Tim Walz on Thursday requested $250 million of that money to be spent to support school districts’ plans for this fall.
The billion-dollar deficit projection could change depending on how quickly the economy recovers.
The next scheduled forecast is in December.
States across the country have similar looming deficits, and Walz is hoping to receive additional federal money.
“Minnesota is not alone. States across the country are facing large budget gaps during this global pandemic,” Walz said in a statement.
“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.”
Scott McClallen is a staff writer covering Michigan and Minnesota for The Center Square. A graduate of Hillsdale College, his work has appeared on Forbes.com and FEE.org. Previously, he worked as a financial analyst at Pepsi.
Photo “Minnesota Capitol” by Gabriel Vanslette. CC BY-SA 3.0.