Letter: Schomacker looks to latest economic forecast
By District 22A Rep. Joe Schomacker, R-Luverne
Minnesota’s economy continues to exceed expectations. State analysts recently found that our state is projected to see a $1.2 billion budget surplus for the remainder of the 2014-15 budget cycle, and a $2.6 billion windfall for the 2016-17 biennium.
This forecast is based on a strong job market that outpaces what was projected in 2012, and state economists are assuming this will continue in future years.
According to the Minnesota Management and Budget Office, individual estimated income tax payments have been higher than expected so far in Fiscal Year 2014, but most of this increase is likely due to taxpayers changing the timing of their payments, rather than higher tax liabilities. Forecast tax revenues increased by $362 million, and higher income and sales tax estimates account for almost all of the gain.
Nationally, consumer confidence also appears to be increasing. Global Insight expects economic activity to accelerate through 2015, fueled by an upturn in consumer spending, improved housing and equipment investment, and the easing of the federal fiscal drag.
There are some uncertainties remaining, as harsh weather has created some unanswered questions relating to job growth in the manufacturing and construction industries.
Manufacturing is Minnesota’s largest job industry and has been the slowest to come back from the recession while agriculture and ag-related jobs, Minnesota’s second largest sector, is currently remaining strong.
Minnesota has not received a negative budget forecast since 2011, and state spending has increased from nearly $35 billion to $39 billion in that time frame. It’s also unclear what effect the policy decisions made during the 2014 session will have on future economic updates.
It’s unclear what’s going to happen with the $1.2 billion surplus, but it does need to be addressed before the 2014 session ends. There are several different proposals that have been offered that will receive serious consideration, and I will be sure to keep you updated on them as session moves forward.