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State budget shows a surplus in November forecast

ST. PAUL -- Jaws dropped this morning as Minnesota leaders learned the state budget will be bigger than earlier thought.

Leaks before the mid-day official release of a budget forecast showed the current two-year state budget that began this summer will have $876 million more available than legislators expected when they plugged a $5 billion deficit in July after a 20-day government shutdown.

Before this morning, most government observers expected a deficit, perhaps as large as $1 billion.

Budget forecasts like today's come twice a year. While today's figure gives state leaders guidance, one to come in late February or early March will be produce the number used by next year's Legislature.

The announcement could set the for continued contentious budget work in the legislative session that begins Jan. 24. In a year that was not supposed to be centered on budget matters, a surplus likely means money talk will dominate as lawmakers and the governor decide what changes are needed in the just-passed budget.

Before doling out money, current law requires funds to first be used to replenish the state's rainy day fund.

To fix a $5 billion deficit, legislators went into overtime this summer, forcing a 20-day government shutdown before agreeing with Democratic Gov. Mark Dayton on a plan. That plan borrows money, delays payments to schools and cuts state spending in a variety of areas (while raising spending in others, such as health care).

A year ago, the deficit was pegged at $6.2 billion, but fell to $5 billion earlier this year.

Budget forecasts are estimates of how much money the state will receive in taxes and other revenues. State officials then compare that figure to how much current law requires the state to spend so they can figure the deficit or surplus.

During some of then-Gov. Jesse Ventura's years in office a good economy fed the state plenty of money; "boatloads of money" in the words of Finance Commissioner Pam Wheelock. That all changed as the economy headed south and the Legislature and governor began turning over stones to find every dollar they could.

The Legislature passes a two-year budget in odd-numbered years, but usually must make some adjustments the following session.

Don Davis reports for Forum Communications Co.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.