Budget & Economic Forecast

NOVEMBER 2013
MINNESOTA MANAGEMENT & BUDGET
MMB.STATE.MN.US
December 5, 2013

$825 Million Budget Balance Projected for FY 2014-15

($ in millions)

Beginning Balance Revenues Spending Reserves Stadium Reserve Forecast Balance School Shift Buyback Repay Airports Fund Available Balance

November Forecast $1,712

39,209 38,807 1,011 19 $1,086 246 15 $825

U.S Economic Outlook is Slightly Weaker

U.S. Real GDP
Annual Percent Change

4
Feb '13 3
2.2

Nov '13
2.8

3.3

3.1

3.3 2.9

3.1

2.8

2.8

2.5

1.9

1.7

0 CY 2012 2013 2014 2015 2016 2017

Source: Global Insight (GI)

Minnesotas Economy Remains Strong

Significant Gain in Forecast Revenues

($ in millions)

FY 2014-15 $19,372 10,194 2,675 1,670 3,541 $37,451 1,427 331 $39,209

$ Change $496 64 254 (16) 27 $824 (22) (15) $787

Income Sales Corporate Statewide Property Tax Other Tax Revenue Taxes Subtotal Non-tax Revenues Other Resources Total Revenues

Revenue Forecast Uncertainties

Federal policy issues
Early 2014 fiscal policy deadlines Federal reserve actions

Continuing economic recovery

Manufacturing Construction

Income shifting in response to federal taxes More revenue from less predictable sources
Non-wage income Corporate profits

Little Change in Spending After Forecast Buybacks

($ in millions)
K-12 Education Property Tax Aids & Credits Health & Human Services Debt Service All Other

FY 2014-15
$16,409 2,946 11,327 1,252 6,872 $38,806 246 15 $39,067

$ Change
$(10) (70) (117) (28) (21) $(247)

Total Spending
School Shift Buyback Repay Airports Fund Total Spending After Buyback

$13

Positive Forecasts Have Restored Reserves and Repaid Accounting Shifts

Cash Budget K-12 Shift Airports Flow Reserve Buyback Fund $255 $255 $621 10 6 13 $650 313 1,324 282 636 246 $2,801 15

($ in millions)

Total $876 323 1,330 295 636 261

November 2011 February 2012 November 2012 February 2013 October 2013 November 2013 Total

$15 $3,721

FY 2016-17 Planning Estimates Improve

End of Session FY 2016-17
Revenues Spending* Difference $41,460 40,738 $722

November FY 2016-17
$42,981 40,783 $2,197

$ Change $1,521 45 $1,476

* Spending not adjusted for general inflation adjusting for inflation would increase spending by $384 million in 2016 and $790 million in 2017