With healthy reserves and a positive budgetary balance, though, the state should have no problem distributing funds as planned for city aid programs.
(Published Jul 17, 2017)
Minnesota Management and Budget (MMB) now estimates that the state’s net general fund receipts for fiscal year (FY) 2017 will be slightly less than anticipated.
Revenue collections for FY 2017—which ended on June 30—will total an estimated $20.95 billion. That is $104 million, or 0.5 percent, less than projected in the February 2017 state budget forecast.
Still, the state general fund budget remains relatively healthy, and state aid funding, including for local government aid (LGA) and the Small Cities Assistance Account, should be secure. The 2017 payments, which are paid from the state’s FY 2018 budget, should be distributed on schedule in July and December.
Individual income tax receipts low
Net receipts for the sales tax, corporate income tax, and other tax receipts all exceeded the forecasted levels, according to MMB, but lower-than-expected net individual income tax receipts more than offset those revenue increases. The decline in state revenues largely occurred in the final quarter of FY 2017, where the revenue collections were $127 million less than forecast.
The decline in individual income tax collections is likely due to slower-than-expected income growth. Data from the Quarterly Census on Employment and Wages now suggests that Minnesota wage and salary income grew about one percentage point more slowly in 2016 than MMB had forecast in February.
Healthy cushion remains
The MMB report only reflects net general fund revenues and does not include any revisions to the state’s FY 2017 spending. The state’s fiscal year that ended June 30, 2017, will officially close on Aug. 11, and the closing budgetary balance will be reported shortly after that date.
However, based on end-of-session estimates that include the court-ordered partial continuation of legislative funding, the state ended the 2016-2017 fiscal biennium with a budgetary balance of $729.6 million. In addition, the state’s budget reserve is currently funded at $1.6 billion. Even with the $104 million reduction in expected revenues, the state will finish the FY 2016-2017 biennium with a healthy cushion.
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