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Minnesota's Budget Outlook Improves by Billions

By Mary Lahammer

With the state's budget forecast improved by billions of dollars, the Minnesota Department of Management and Budget is now predicting a surplus as concerns of a major shortfall fade.

To call 2020 an unpredictable year is an understatement, and predicting how the economy will respond to a pandemic and social unrest hasn’t been easy. Budget Commissioner James Schowalter summed up the unusual times by saying, “I would have never predicted I’d be doing a forecast in my basement.”

The budget outlook swung billions of dollars to the good, thanks to better than expected consumer spending and less government spending on health care and education - with fewer Minnesotans doing routine health visits and more than 12,000 fewer kids in public school. As a result, one question stands out: If a significant number of kids have dropped out of school, what does that do to exacerbate the achievement gap and equity concerns the state already faced before the pandemic? In response, Gov. Tim Walz said, "Yes, it did exacerbate the achievement gap. I didn’t envision being the COVID Governor - I’m the education governor." Walz would like the new legislature coming into regular session in January to consider some new creative ideas aimed at addressing the achievement gap between white students and students of color, which is already one of the worst in the nation.

With the volatility in the budget forecast, we also asked the new Budget Commissioner if the February forecast is enough or if we should see another one in March, April, May? “Oh goodness no, I think the lesson is continuing to look at new information is important, but two forecasts a year is a useful construct,” said Schowalter.

Republican Majority Leader Paul Gazelka responded to the new forecast, saying, “We have a surplus - we don’t need to raise taxes, period. We do need to tighten our belt because as we move forward, we [could] move into a deficit if we don’t take care of spending now."

With a lot of shuffling among political positions in the wake of the November election, Minnesota remains the only state in the nation with a divided House and Senate. Almanac Political Reporter Mary Lahammer offers this look at what that means for the political road ahead.

When former child actor Brock Pierce – who also ran for President as an Independent candidate – traveled to Minnesota, he got some pointers from former third-party governor Jesse Ventura and former U.S. Senator Dean Barkley, who earned major party status for the Reform Party, which later became the Independence Party. Almanac Political Reporter Mary Lahammer takes a look at the influence of third parties in Minnesota politics.

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