There's no fudging it, Session Daily's Mike Cook reports in Coronavirus-fueled economic uncertainty muddies state budget planning:
Was it really less than two months ago when state finance officials indicated Minnesota was projected to have a $1.5 billion surplus?
Even though it feels a lot longer to many folks, the answer is yes.
Now, with the uncertainty of what the COVID-19 pandemic will cost the state up and down the ledger sheet, both short and long term, state officials can no longer paint a rosy picture. Or a full one, because the economic impacts won’t be known for some time.
”The signals we normally use are delayed and muddied and less clear than they usually are,” State Economist Laura Kalambokidis told the House Ways and Means Committee Monday.
What Minnesota Management and Budget officials are certain of, and were able to share at the remote hearing, is that expenses are rising and revenues are falling. No action was taken at the meeting.
Released Friday, the latest revenue and economic update showed state General Fund revenues for February and March were $103 million below forecast amounts.
Additionally, Minnesota’s macroeconomic consultant, IHS Markit, projected a 2.1% national economic growth in 2020, the number used by the state in developing the February Forecast. However, a 5.4% decrease is now projected for the calendar year.
According to the update, “IHS expects the spread of COVID-19 to peak and then dissipate in the second calendar quarter of 2020, allowing social distancing restrictions to be lifted during the third quarter. Economic recovery begins in the third quarter, and real GDP growth turns positive in the fourth. Real GDP growth in 2021 is projected at 6.3 percent.”
The key word may be “expects.” . . .
Read the rest of the mess at Session Daily. Here's the video of the remote hearing:
Here are the documents related to the hearing from the committee's website:
- 4.13.2020 Ways and Means Agenda - 4/9/2020
- Ways and Means Minutes 3.9.2020 - 4/9/2020
- Appropriations of Federal Funds Memo - House Fiscal Analysis - 4/9/2020
- Federal COVID-19 Funding (CARES Act+) - House Fiscal Analysis Spreadsheet - 4/9/2020
- Quarterly Revenue and Economic Outlook - April - 4/10/2020
In a press release, committee chair Lyndon Carlson, DFL-Crystal, noted:
“Minnesota is going through unprecedented economic times. It is critical that we work early and often to balance the budget before the end of the fiscal year,” said Rep. Lyndon Carlson (DFL – Crystal), chair of the House Ways and Means Committee. “It is too early to say just how much COVID-19 will cost Minnesota, both in loss of revenue and increased spending to manage the virus. Regardless of the final budget forecast, House Ways and Means will fulfill its constitutional duty to balance the budget.”
Photo: The Gilded Quadriga (Progress of the State) at the Minnesota State Capitol doesn't have to worry about social distancing. The Minnesota House Means & Means Committee, on the other hand, held its meeting regarding the quarterly budget outlook with its members at remote locations. Photo via Minnesota Historical Society.
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