ST. PAUL — Minnesota pulled in $2.7 billion more than was projected earlier this year as the state's economy outperformed expectations, state economists reported Monday, July 12.
Minnesota Management and Budget officials said the state is on pace to take in $26.6 billion in net general funds in the budget cycle that ended June 30, an 11.2% bump from what they'd forecast in February. The boost in dollars flowing to the state stemmed from increased tax receipts across several categories.
The news of a bigger-than-expected surplus comes months after economists predicted and state legislators planned for a $1.3 billion shortfall spurred by COVID-19 and slowed economic activity. Several rounds of stimulus payments from the federal government and rebounding of the state's economy helped stave that off.
As more Minnesotans get vaccinated, additional businesses reopen and financial supports from the state and federal government continue to flow to consumers, economists said they expect that Minnesota will report further economic growth.
Budget officials said IHS Markit, the state's macroeconomic consultant, projected that real gross domestic product would grow 6.6% this year and 5% next year. That's up from the 5.7% bump they projected for this year during a February forecast and 4.1% for the coming year.
State lawmakers last week closed out a special legislative session after wrapping up a $52 billion budget for the next two years. The plan doesn't increase taxes and would provide tax relief to business owners that drew down federal loans and Minnesotans that received unemployment insurance during the pandemic.
Gov. Tim Walz said the update was positive news and showed that Minnesota's economy was strong.
“Minnesotans got through this pandemic with grit and resilience, and now our COVID-19 Recovery Budget will continue to drive our economic success by supporting small businesses, working families, and students," Walz said in a news release.