Minnesota’s net general fund receipts totaled $2.592 billion during the months of February and March 2020, or $103 million less than projected in the February 2020 Budget and Economic Forecast, indicating how COVID-19 is beginning to impact Minnesota. The House Ways and Means Committee heard Monday afternoon from Minnesota Management and Budget (MMB) how total net receipts for March were $1.581 billion or $62 million less than forecast.
Last Friday, MMB released an April revenue update explaining the 3.8 percent shortfall reflects the pace of income tax refund processing, payment delays, and the beginning of the impact of deteriorating economic conditions on state tax revenues.
The Senate COVID-19 Response Working Group had heard a presentation from Dr. Kalambokidis from MMB last week as well. She shared a grim picture of the state’s financial outlook, saying the $1.5 billion budget surplus that was projected just over a month ago has, in all likelihood, evaporated. She warned the work group, “We are waiting for a tsunami of revenue NOT to show up.”
Minnesota is fortunate to have a healthy budget reserve, but that too, will likely be exhausted as we recover from the pandemic. The next quarterly economic update is due to be released today, but both cautioned that it will be several weeks, if not months, before we know the full impact the pandemic has had on the economy and Minnesota’s budget.
Governor Walz has requested MMB provide a budget projection the first part of May to update him on what Minnesota’s economic outlook may look like over the next six months.