State economists project $876M surplus

The state economists project an $876 million surplus to the general fund according to a state forecast for the two-year budget cycle.
The fiscal year balance for 2011 came in higher than expected by $526 million. Add to that an additional $205 million that the state didn’t spend this year and the forecast for the 2012-13 biennium is the first state budget surplus since 2007.
With the state in debt and recovering from a grueling shutdown, the surplus comes as a surprise.
Although the state has more money to use than expected, according to Minnesota Management Budget’s November forecast for 2011, state law dedicates the money to first replenish the cash-flow account and budget reserves.
The forecast budget adds $255 million to fill the cash-flow account that maxes out at $350 million. The remaining $621 million was allotted to the state budget reserve. These functions engulf the entire surplus.
State officials caution that although the surplus is good, the state should be careful with its monetary future.
“While we made progress … we still have challenges and work to go ahead,” said James Schowalter, the commissioner of Minnesota Management and Budget, at a press conference Thursday. “We want to make sure we have some stability, we want to restore the fiscal stability of the state.”
State Economist Tom Stinson explained the current status of Minnesota’s economy at the conference.
“Since the recovery began, Minnesota has regained a third of jobs lost,” he said.
While acknowledging that “there are still plenty of risks out there,” Stinson also said the state’s economy is doing better than the nation and that progress is expected to continue into 2012.