Minnesota Reports Very Positive Revenue News; Will Wisconsin Keep Pace?
Minnesota releases updated revenue and spending projections in early December of each year, and the new figures released today are very positive – a net gain in the Minnesota budget balance of about $1 billion. Let’s hope that Wisconsin can come close to matching that when our new tax and spending estimates are released in late January or February.
As we noted in a blog post about two weeks ago, many people across the country are watching Minnesota and Wisconsin carefully because of the very different directions that the two states have gone in fiscal and health care policy over the last couple of years. Because of the many demographic similarities between the two states, the divergent choices by policymakers set up an interesting experiment. In that context, today’s budget news from our neighbor to the west could be an early point in their favor, but we won’t have any basis of comparison in Wisconsin for another month or two.
The Minnesota budget improvement announced today, which is an increase in their projected general fund balance at the end of their current biennium of a little over $1 billion, results from a $787 million increase in projected general fund revenue and a $247 million decrease in estimated spending. Their budget office attributes the revenue growth to a strengthening state economy, resulting in higher-than-previously-anticipated corporate and individual income taxes. According to the preliminary federal data, real GDP grew by 3.5% in the Gopher State in 2012, the 5th fastest growth in the nation. Wisconsin experienced 1.5% growth last year and ranked 32nd.
Of course, not all economic and fiscal news in a state is rooted in policy choices, as lawmakers often remind us when the news is negative. For the sake of our budget, let’s hope that the good fiscal news in Minnesota has been driven in large part by regional or national improvements in the economy, and that the news in Wisconsin a month or two from now will be at least as positive.