ST. PAUL (KMHL/LEARFIELD) – A sudden change in the circumstances surrounding COVID-19 is leaving a big hole in Minnesota’s budget.
The special economic forecast put together by Minnesota Management and Budget Commissioner Myron Franz estimates the state will now face a $2.4 billion budget shortfall. That’s a change of nearly $4 billion from the state’s project $1.5 billion surplus from the February forecast.
Gov. Tim Walz says the state’s past approach to budgeting has put Minnesota in the best possible position to power through the crisis.
“Minnesotans have approached budgeting with a very conservative approach. A very forward leaning approach in terms of things that grow the economy,” said Walz. “And now is not the time for us to back off on those. Its time for us to make hard decisions, but to be thoughtful on how we do this.”
Franz says the state’s rainy day fund can be tapped to help ease the budget strains, but that step should be taken with caution.
“Depleting these funds in this current situation is difficult because we know revenues are going to continue to decline during the remaining 14 months,” said Franz. “And there are many factors with a high degree of uncertainty about today’s budget projection.”
Earlier this year the state had a projected budget surplus, that has been wiped out because of COVID-19 related spending as well as dramatic decreases in sales and income tax collections.