February forecast’s strong surplus creates opportunity to invest

The state’s February 2015 Economic Forecast released today shows good news for three budget cycles. After years of deficits and cuts in services, these positive projections offer lawmakers an opportunity to invest in broader economic security for all Minnesotans.

First, here’s a look at the numbers. The forecast projects a $478 million positive balance for the remainder of the current budget cycle, the FY 2014-15 biennium, which ends on June 30.

Policymakers are getting ready to set the budget for the upcoming FY 2016-17 biennium, for which the forecast projects a $1.9 billion positive balance. Taking into account the cost for current services to keep up with inflation reduces this figure to $976 million.

The forecast also gives us another glimpse into the FY 2018-19 biennium, where a $3.2 billion positive balance is projected. This becomes a slight deficit of $95 million when the impact of inflation is taken into account.

The February forecast projects larger surpluses than predicted in the November forecast. The strong balances in the forecast are due to a few factors. Revenues are projected to come in higher than expected. The strongest driver here is higher income tax collections, due to expected rising incomes.

The forecast also shows lower projected expenditures. In the 2014-15 biennium, this is due in part to lower Medical Assistance spending. In the 2016-17 biennium, lower projected spending in E-12 education contributes to the positive projected balance. The lower projected E-12 spending is a result of declines in three areas: student enrollment, growth of poverty concentration (which is used to calculate compensatory aid for schools), and special education spending.

Today’s forecast shows a stronger outlook for the U.S. economy, projecting national GDP growth of 3.0 percent in 2015, up from the 2.6 percent projected in November. Growth in 2016 and 2017 is expected to be 2.7 and 2.8 percent respectively, slightly lower than the November projections.

Minnesota’s economy continues to do well. The state’s 3.6 percent unemployment rate in December remains the fifth lowest in the nation and the lowest rate since 2001. Wage growth is projected to be higher than expected in the November forecast, contributing to higher anticipated revenues. In 2015, wages are expected to grow by 5.4 percent, and they are projected to grow close to 5.0 percent each year in 2016 and 2017.

Minnesota has turned the corner after a decade of deficits, and is on firmer footing to make investments in a stronger future. However, even as the state’s economy has improved, many Minnesotans still struggle to make ends meet. As policymakers put together the budget for the upcoming biennium, they should continue to focus on expanding economic opportunity to all Minnesotans.

We’ve been highlighting the importance of affordable child care for Minnesota families. Child care can be one of the largest items in a family’s budget. When families have access to affordable child care, children are nurtured in stable environments and parents can succeed on the job. But for too many families, affordable child care is out of reach; for example, over 6,000 Minnesota families are on waiting lists for Basic Sliding Fee Child Care Assistance.

Governor Dayton has shown his commitment to making child care more affordable for more Minnesota families by proposing to increase funding for Basic Sliding Fee and expand the Child and Dependent Care Credit in his budget. Legislators from both parties have gone a step better by proposing bills with larger funding increases to Basic Sliding Fee that would reach more families, including all of the current waiting list, and protect parent choice by increasing reimbursement rates for child care providers. These bills represent a smart investment in our current and future workforce, and should be a priority for policymakers this session.

The tax policy choices made in the past two years made important progress making our tax system more fair. Minnesota has shrunk the gap between what most Minnesotans pay in state and local taxes (measured as a share of their incomes) and the smaller percentage that those with the highest incomes pay. However, too many of the tax bills proposed this session so far would re-open that gap through tax cuts that would go primarily to those with the highest incomes.

Policymakers should resist the urge to make deep cuts to taxes. History shows that when taxes are cut too much in good times, it makes it more difficult for the state to respond in the next economic downturn. Any tax cuts that are made should be sustainable, well-targeted and have tax fairness as a primary goal.

The forecasters are fairly confident in today’s projections. Global Insight, Minnesota’s economic consulting firm, assigns a 70 percent probability to their baseline economic forecast, and a 15 percent probability to their more pessimistic and optimistic scenarios. In the pessimistic scenario, the economy sees a weaker housing market and weaker foreign growth. In the optimistic scenario, oil prices drop more than expected and there is stronger foreign growth.

Policymakers will be using the numbers in today’s forecast to set their budget proposals. Stay tuned to the Minnesota Budget Project to keep you updated as the state’s budget is put together.

-Clark Biegler

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Governor Dayton invests in Minnesota’s students

We’ve been sifting through Governor Mark Dayton’s budget. Previously we analyzed his tax and child care proposals, and now we’re looking into his education proposals.

In his budget, Dayton affirms his commitment to Minnesota’s students. About half of the new spending in the governor’s budget goes to our state’s students, from early childhood to college.

Two major initiatives in E-12 education are expanding pre-kindergarten and additional funding for school districts under the general formula.

Dayton proposes funding to encourage expansion of free pre-kindergarten starting in FY 2017. Under the governor’s proposal, schools would need to provide matching funds and districts would be given a year to plan before pre-kindergarten begins. Since Dayton proposes that pre-kindergarten will be available in more districts over time, the costs grow accordingly, from $106 million in FY 2017 to $360 million in FY 2018-19.

The governor’s pre-kindergarten proposal represents one of several early childhood priorities that he has put forth to serve children in their earliest years, including child care through Basic Sliding Fee and Head Start. The governor uses a multi-pronged approach to help children to start off in stable environments and serve the diverse needs Minnesota’s families.

Dayton also increases the general funding formula for school districts by one percent in both FY 2016 and 2017. This translates to a $58 increase per pupil in FY 2016 and a $59 increase per pupil in FY 2017. This helps Minnesota schools keep up with the rising costs of teaching Minnesota’s students.

The governor also makes additional investments in FY 2016-17 in our E-12 students, including:

  • $4 million for two initiatives to address the achievement gap, the Northside Achievement Zone and the St. Paul Promise Neighborhood
  • $8 million for the state’s English learning program
  • $10 million for Minnesota Reading Corps
  • $19 million for Head Start
  • $28 million for school breakfasts for students in pre-kindergarten to 3rd grade

Students in higher education are also a focus. Dayton’s budget proposal includes $25 million in improvements to financial aid through the Minnesota State Grant program. He would increase the maximum amount of financial aid to meet the cost of Minnesota’s public colleges and universities. The grant program also has a living allowance, which the governor would increase to match the federal poverty level. This would help Minnesota students better access all of our state’s public colleges and universities and help students meet their basic needs while in school.

Dayton also proposes providing half of the funding required for the University of Minnesota to continue a tuition freeze for another two years. In the 2013 Legislative Session, policymakers froze tuition at the University of Minnesota and Minnesota State Colleges and Universities (MnSCU) for two years. Under this year’s proposal, the governor asks the University of Minnesota to provide half of the funds needed for students to see another two years of flat tuition. Dayton has indicated that he will provide the same to MnSCU in his supplemental budget if MnSCU resolves an internal conflict between administration and faculty.

Dayton’s budget proposal represents important investments in Minnesota’s students and future workforce. Making educational opportunities more affordable for Minnesotans of all ages should be a high priority for the state.

-Clark Biegler

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Tip penalty threatens economic security for Minnesotans

The economic security of tipped workers in Minnesota is threatened by House File 1027, which passed the House Job Growth and Energy Affordability Policy and Finance Committee earlier this week.

Minnesota is one of several states that does not include a tip penalty in the minimum wage. Workers who receive tips earn the same minimum wage as most other workers. The minimum wage for large employers is currently $8.00 per hour and set to increase to $9.50 by 2016.

House File 1027 would set a lower minimum wage for workers, such as restaurant servers, who receive $4.00 per hour or more in tips on average in a pay period. Their minimum wage would decrease to $8.00 per hour.

The minimum wage sets a wage floor among all workers, and for tipped workers provides a certain level of stability. This bill would erode the progress our state made last session when policymakers passed a long overdue raise to the state’s minimum wage so that workers’ wages can catch up and keep up with the cost of living.

While the minimum wage for Minnesota workers is set to increase along with the rising cost of goods starting in 2017, under House File 1027 the tip penalty wage would remain the same. So while non-tipped minimum wage workers will receive a raise each year to help them buy groceries, pay their rents and pay for other basic necessities, tipped workers subject to the tip penalty would still depend on a minimum wage of $8.00 per hour.

Last year’s increase to the state’s minimum wage brings 325,000 Minnesotans closer to economic security. House File 1027 would undo some of this important work. Policymakers should support Minnesota workers and promote economic security, not pass legislation that further lowers wages.

-Clark Biegler

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Governor Dayton’s budget invests in children

To make Minnesota a state where every child can thrive, we must make efforts to support children directly, but also invest in the adults who look after them. Appropriately, Governor Mark Dayton’s budget includes several initiatives to address the needs of children and their caretakers — both parents and professional child care workers. Some of the highlights include:

Increasing access to Basic Sliding Fee Child Care Assistance. Dayton proposes an additional $13 million in FY 2016-17 to help more families afford child care through Basic Sliding Fee. Basic Sliding Fee helps families pay for care for children from infancy through age 12, but had a 6,157 family waiting list as of November.

With Basic Sliding Fee, children can thrive in stable environments while their parents are able to get to work or class. The administration estimates this proposal would result in a roughly 10 percent decrease in the waiting list.

Expanding the Child and Dependent Care Tax Credit. For the FY 2016-17 biennium, Dayton proposes a $100 million expansion so that more families can claim the Child and Dependent Care Tax Credit, which helps families offset a portion of the costs of care for children and some other dependents. He would also increase the maximum amount families can claim.

This approach of additional funding for Basic Sliding Fee along with a targeted expansion of the Dependent Care Credit are important steps that policymakers should support so that more Minnesota families can afford the child care that meets their needs. We encourage a stronger investment in Basic Sliding Fee, which focuses on the families who struggle most to afford child care.

Strengthening the Child Care Assistance Program. About $1.6 million in FY 2016-17 is proposed to simplify the Child Care Assistance Program for families and providers. Child Care Assistance includes Basic Sliding Fee and child care through the Minnesota Family Investment Program. Dayton’s proposal reduces administrative burdens around payment issues and allows children to stay in consistent care if their parent’s work schedule changes. These changes will help families as well as reduce administrative complexity and unpredictability for providers.

Providing mental health consultations for children and their families. When surveyed about their needs, many child care providers asked for help identifying and addressing the mental health issues observed in the children and families they serve. Dayton’s budget includes $922,000 in FY 2017 and $1.5 million annually thereafter for mental health consultations for children when they enter child care settings through public services like early childhood special education or the Minnesota Family Investment Program. In addition to improving health outcomes for children, the administration predicts that these consultations will reduce expulsions from child care and reduce turnover rates for child care staff.

Increasing the number of Head Start opportunities. Dayton’s proposal includes $19 million annually starting in FY 2017 so that more three-to-five-year-olds can participate in Head Start. Head Start prepares pre-schoolers for kindergarten and connects parents with supportive services. The administration estimates that the proposed increase would help 2,485 more children enter kindergarten better prepared for learning.

Encouraging school districts to establish pre-K. The governor’s budget takes some first steps toward voluntary pre-kindergarten programming being available to all four-year-olds. His budget includes funding for some school districts to expand pre-K, although school districts would need to provide matching funds. Dayton’s budget proposes $3 million in funds for preparation in FY 2016, followed by $106 million in FY 2017, and $360 million in FY 2018-19 for implementation.

Every child and family has a unique set of needs. Dayton seeks to put more children on the path to a healthy, successful future. This is a goal that lawmakers should also embrace this session.

- Ben Horowitz

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Child poverty map demonstrates need for more state investment in economic opportunity

Poverty is more common among Minnesota children than adults, and child poverty is highest in rural counties. This information is presented visually in our project with Catholic Charities of St. Paul and MinneapolisMapping Minnesota’s Future to Shared Opportunities.

According to the Census, 14.3 percent of Minnesota’s children lived in poverty in 2012, compared to an adult poverty rate of 10.2 percent. The child poverty rate ranged from 5.9 percent in Scott County to 43.1 percent in Mahnomen County. Child poverty rates could not be calculated for seven counties due to a lack of data.

Rural counties’ child poverty rates (16.7 percent on average) were higher than those of urban counties (12.6 percent on average). Of the 12 counties where at least 20 percent of children live in poverty, only two were metropolitan.

What makes a county rural? The federal Office of Management and Budget labels 27 Minnesota counties as metropolitan because they have a “high degree of social and economic integration” with urban areas of 50,000 or more people. These “metropolitan statistical areas” include 14 counties in the Twin Cities region, and another 10 counties around regional centers like Duluth, Mankato, Rochester and St. Cloud. They also include Polk, Clay and Houston counties, which are part of the Grand Forks, Fargo and La Crosse metros, respectively. The 60 other Minnesota counties are considered rural.

Poverty can harm a child’s overall well-being regardless of where they live. For example, when parents don’t earn enough for stable housing or child care, a child’s academic performance and social development can suffer.

This session, Minnesota policymakers can create more opportunities for families to move toward greater economic security. Examples include:

  • Basic Sliding Fee Child Care Assistance helps families pay for child care so that parents can go to school or work while their children receive stable care. But more funding for Basic Sliding Fee is needed: more than 6,000 Minnesota families are on the waiting list for assistance.
  • Policymakers can also act so that more workers can earn sick and safe time so that they don’t lose wages or their jobs when they take the time to care for themselves or for sick family members.

Our child poverty map depicts a clear statewide need for policies like these that support the whole family. Whether they live in Mahnomen or Scott county, every family should have the opportunity for improved economic well-being.

-Ben Horowitz

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Affordable child care, transportation are focal points of Dayton’s tax proposal

We’ve been digging into the details of Governor Dayton’s budget proposal, and I’ve been looking at the tax portion. It follows familiar themes from the Governor’s previous tax efforts: focusing on the concerns of middle-class families and building ladders into the middle class, and raising revenues to fund investments in the state’s economic success.

The two primary pieces of the Governor’s tax package are: increasing transportation funding and helping Minnesota families with the high cost of child care.

Dayton proposes a $100 million expansion in the state’s Child and Dependent Care Tax Credit, which seeks to make affordable child care available to more Minnesota families. Child care can be one of the largest expenses that families with children face. The Dependent Care Credit provides a tax credit based on what a family pays for child care so that parents can work or look for work. However, it hasn’t kept up with the rising costs of child care. Under Dayton’s proposal:

  • The maximum income at which a family can qualify for a credit would go up to $112,000 for families with one dependent and up to $124,000 for families with two or more dependents. It’s currently at $39,000.
  • The maximum amount of credit a family can receive would go up to $1,050 for families with one dependent, and up to $2,100 for families with two or more dependents.

An estimated 110,000 Minnesota families would benefit from this proposal by an average of $429, including 92,000 families who don’t currently receive the credit. This tax credit can also be used for care for elders and people with disabilities, as long as they are claimed as dependents by the taxpayer and the care is so the taxpayer can work or look for work. That would continue to be true under Dayton’s proposal.

The Dependent Care Credit expansion and Dayton’s proposed increase in funding for Basic Sliding Fee Child Care Assistance are two important steps to help Minnesota families with the cost of child care. Policymakers should follow Dayton’s lead in making affordable child care a priority this session. We recommend making the Dependent Care Credit proposal more targeted by not raising the income ceiling quite as far. We’d also put additional resources into Basic Sliding Fee, which is a better mechanism to reach the families that struggle most to afford child care.

The other major component of Dayton’s tax proposal seeks to address the state’s transportation needs by raising an additional $2.2 billion in FY 2016-17 in revenues dedicated to transportation and transit. This includes:

  • A 6.5 percent gross receipts tax on gasoline;
  • An additional half-cent local sales tax in the 7-county metro area for transit; and
  • An increase in vehicle registration fees (commonly called “tabs”).

These funding sources are all regressive taxes, which means that low- and moderate-income Minnesotans pay a higher share of their incomes on those taxes. Given this fact, and the role that transportation plays in access to jobs and economic opportunity, meeting the transportation needs of low-income persons and economically struggling communities should be an important factor in decisions about where to invest in transit and transportation.

A less prominent but also important piece of Dayton’s budget is a package of initiatives to close tax loopholes used by a relatively small number of corporations, and thereby create a more level playing field for all business taxpayers.

The backdrop for this year’s tax debate is the 2013 tax reform bill. That bill raised revenues to end the cycle of frequent budget deficits, and it made the tax system more fair. This was followed by tax bills passed in 2014 that cut taxes in FY 2016-17 by about $1 billion.

Through actions taken in 2013 and 2014, Minnesota has shrunk the gap between what most Minnesotans pay in state and local taxes (measured as a share of their incomes) and the smaller percentage that those with the highest incomes pay.

This year, we should continue the progress for a fair tax system and sustainable budget choices through limited tax cuts focused on the needs of Minnesotans. The larger tax cuts that some have proposed would make it harder to invest in our schools or make child care and higher education more affordable, as Dayton does in his budget. As we learned in the 2000s, large tax cuts in the good years make it harder to respond to the next economic downturn, and put a whole range of critical state services, from schools to nursing homes, at risk.

-Nan Madden

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Seven reasons to invest in Basic Sliding Fee this session

All Minnesota parents should be able to go to school or work with the knowledge that their children are in a stable, nurturing environment.

Fortunately, elected officials from both parties have stated children are a top priority for this year’s legislative session. Governor Dayton’s budget proposal dedicates $13 million to provide more families access to affordable child care through Basic Sliding Fee Child Care Assistance. This is a good start, and an additional funding boost could reach the thousands of Minnesota families on Basic Sliding Fee’s waiting list who find affordable, stable child care beyond their reach.

Basic Sliding Fee supports working families by paying a portion of their child care bill. It can be used at a wide range of providers, when and where parents need it so that they can get to their job or classes.

Below are seven percentages that highlight why increased funding for Basic Sliding Fee is a critical step towards a Minnesota where all families can afford child care.

134 percent: The ratio of center-based infant child care costs to college tuition

In a recent report by Child Care Aware of America, Minnesota ranked as one the five least affordable states for child care for young children. They found that the average cost of child care for an infant or a four-year-old is more expensive than the average full year’s tuition at Minnesota’s public universities.

20 percent: The percentage of parents in Northeast Minnesota who turned down a job because of child care concerns

In 2013, Wilder Research surveyed parents with children under age 12 in parts of upper St. Louis and Itasca counties, excluding Duluth and Grand Rapids. Twenty percent replied that they “had problems that prevented accepting or keeping the kind of job [they wanted]” due to child care problems in the last six months. Six percent also reported quitting or being fired from a job because of child care issues during the same period.

29 percent: The average amount child care takes out of a low-income family’s budget

This number comes from a 2009 Wilder Research survey of parents around the state who had child care costs. They found that families earning less than $20,000 paid an average of 29 percent of their incomes for child care.

664 percent: The growth in the Basic Sliding Fee waiting list since 2004

In 2003, policymakers drastically reduced the amount a family could earn and still qualify for Basic Sliding Fee. Despite the reduction in the number of eligible families, the waiting list grew from 927 families in November 2004 to more than 6,000 families in November 2014.

60 percent: The percentage of six-to-nine-year-olds that are regularly in child care

A 2009 Wilder Research survey found that parents don’t necessarily stop needing child care when their kids start school. The school day doesn’t match the work day, and lots of older children need a place to go when their mother or father works during non-school hours, or during the summer. In addition, half of 10-to-12-year-olds are regularly in child care. Basic Sliding Fee provides care from infancy through age 12.

65 percent: The percentage decrease in the amount the state pays child care providers since 2003

The state sets a cap on the amount it will pay child care providers for families receiving assistance. In inflation-adjusted dollars, that cap is now about a third of what it used to be. This means that Basic Sliding Fee families may have difficulty finding providers. (The provider reimbursement cap varies by region and a child’s age — this percentage was calculated using data for toddlers in Hennepin County, but the change was likely similar across age groups and counties in Minnesota.)

100 percent: The percentage of families that deserve access to affordable, stable child care

When a family doesn’t have access to stable child care, everybody suffers. Children don’t get to develop solid attachments. Parents miss out on chances to work or get an education, and employers struggle to find the workers they need. Policymakers can relieve the pressure for many more families this session by embracing a bigger investment in Basic Sliding Fee.

- Ben Horowitz

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Governor’s budget continues to invest in a strong future for Minnesota

Governor Mark Dayton’s state budget proposal released today provides new investments for our state, and particularly focuses on getting our youngest Minnesotans started on the right foot.

The positive balance projected in the November forecast allows Minnesota to make some much needed investments. And Dayton’s proposed budget makes targeted investments in a future of opportunity for all Minnesotans, particularly for children and young people.

We’re just starting to dig into the details, but here’s what we see on some of our priorities for the session.

Dayton’s budget increases access to affordable child care through a range of options. Affordable child care supports children’s development, helps parents get and keep good jobs, and allows employers to find the reliable workers they need.

Dayton’s budget includes $13 million in new funding in FY 2016-17 for Basic Sliding Fee Child Care Assistance. The governor’s proposal is a important step in the right direction. Basic Sliding Fee helps low- and moderate-income working parents in every part of the state afford the care that meets the needs of their children age zero to 12. Today more than 6,000 Minnesota families are on the waiting list.

On the tax side, Dayton also proposes to assist Minnesota families with the high cost of child care. He expands the state’s Child and Dependent Care Credit, which provides a tax credit based on what families have paid for child care so that parents can work or look for work. His proposal would:

  • Increase the maximum income at which a family can receive the credit to $112,000 for families with one dependent and $124,000 for families with two or more dependents. Currently, the credit is only available to families with incomes less than roughly $39,000.
  • Increase the size of the credit to up to $1,050 for one child and $2,100 for families with two or more children.

The administration estimates 110,000 Minnesota families would benefit by an average of $429. This proposal would continue the progress made over the past few years to make the tax system work better for working families. We encourage making this proposal more targeted to make resources available to further boost Basic Sliding Fee for those families that struggle most to afford the cost of care.

Among the budget plan’s other investments in young Minnesotans are increasing funding for school districts by 1 percent each year through the basic formula, funding for schools to expand pre-kindergarten, as well as addressing the waiting list for Head Start, which prepares low-income children for school.

Making a college education more affordable is another one of Dayton’s priorities. His budget would increase financial aid so that Minnesota students can better access all of our state’s public colleges and universities, and help students meet their basic needs while in school.

Stay tuned for our upcoming in-depth dives into some of the governor’s proposals. In the meantime, you can check out links to Dayton’s budget proposal.

-Clark Biegler

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Still time to get health insurance

Time is running out to make sure members of our communities find their way to affordable health care coverage. February 15 is the last day to enroll in private health insurance through MNsure, the state’s health insurance marketplace. After that, unless an individual or family has a qualifying life event, such as loss of a job or birth of a child, they will not have an opportunity to enroll in private health insurance through MNsure until next year’s open enrollment.

MNsure is Minnesota’s online marketplace where individuals and small businesses can shop for, compare and enroll in insurance. The federal Affordable Care Act requires nearly all U.S. residents to have health insurance or pay a penalty.

No one is required to get health insurance through MNsure. However, MNsure is the only way to access federal tax credits that reduce the cost of private insurance premiums. MNsure is also a way to enroll in public health insurance programs. What health insurance options are available depends primarily on income and family size; for example, a single adult may be eligible for public health insurance with an income up to $23,340 and may qualify for a premium tax credit with an income up to $46,680.

Making health care decisions can be complex, and for those who have yet to obtain health insurance, finding someone to help them through the process is often the missing link. Many nonprofits have trained people, called Navigators, available to help Minnesotans learn about and enroll in health insurance. All of us can play an equally essential role by making referrals to Navigators ready to offer their assistance in our communities.

Directories of Navigators across the state are available online in the Health Care Enrollment Resources section of our website.

There is also more information available on the MNsure website, or through its toll-free hotline at 1-855-3MNSURE (1-855-366-7873).

Don’t delay: spread the word that the time to get health insurance is now!

-Leah Gardner

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Minnesota’s January Economic Update brings good news for right now

Minnesota ended the 2014 calendar year on a high note. State revenues came in higher than expected for November and December, and the U.S.’s near-term economic outlook has improved, according to the January Economic Update from Minnesota Management and Budget.

For the last two months of 2014, revenues came in $212 million, or 6.4 percent, higher than projected in the state’s recent November forecast. Most of this difference came from higher income tax collections. However, MMB warns that this is likely due to early payments, rather than additional improvement in incomes.

News on the economic front shows some improvement from the November forecast. The nation’s GDP grew faster than expected during 2014, and growth was over 4 percent for two quarters in a row for the first time since 2003. Looking forward, the economy is expected to grow faster in 2015 than predicted in the November forecast. This is due in part to lower gas prices, which have freed up more income for other household needs.

Looking further out, predicted economic growth is slightly lower than expected in the November forecast. In 2016, projected growth is very similar to earlier projections, and in 2017 and 2018, while projections are lower, the economy is still expected to grow at 2.7 and 2.4 percent, respectively.

January Update

Forecasters continue to assign a 70 percent probability to their baseline forecast, with a 15 percent chance for more optimistic and pessimistic scenarios. In the pessimistic scenario, a weaker housing market is a drag on economic growth, and in the optimistic scenario, oil prices drop even more than expected and the U.S. economy receives a boost.

Our next look at state revenues and the economy will come in the February forecast. This is the information that legislators will use as their baseline as they set the upcoming budget in the 2015 Legislative Session. This update indicates that we might have a brighter situation in 2015, but this will unlikely significantly impact the state’s projected positive balance in the two upcoming biennia.

-Clark Biegler

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