CHICAGO — Minnesota expects to close out its current budget cycle with a $1.3 billion balance but faces headwinds going into its next two-year cycle with a looming $1.1 billion deficit as revenue growth can’t meet costs and the state won’t have the one-time revenues that helped balance its current books.

The latest revenue figures were released Wednesday in the state Management and Budget Office’s annual November forecast. The state expects to collect $35.8 billion of revenue in the current biennium that ends June 30. That’s down from $68 million projected in the state’s earlier forecast. The decline was partially offset by a reduction in spending of $43 million.

Officials expect to close out the biennium with $1.1 billion more in revenues and reduced spending of $262 million. Minnesota is on course to close its books with a balance of $1.3 billion June 30. All of the funds will go to repay state school aid delayed to help balance the current budget. That leaves the state still owing districts $1.1 billion.

Looking forward to the next budget, the state’s projections are still fairly in line with previous projections, although an additional $16 million was added to the looming shortfall. The outlook has changed little since the last forecast, when a $1.1 billion deficit shortfall was projected.

The state relies on Global Insight for its economic data and its November baseline calls for U.S. economic growth to average 2.8 % in the state’s next biennium, down from a 3.1 % projection last February.

“That slight decline in the economic outlook, coupled with several one-time items that increased fiscal 2012-13 revenues but did not add to future revenues, left fiscal year 2014-15 revenues almost unchanged from earlier planning estimates,” the revenue forecast reads.

Uncertainty over whether the federal government and Congress will resolve budget differences and avoid the fiscal cliff are adding an element of uncertainty to planning for the next budget Gov. Mark Dayton will unveil early next year.

“Global Insight believes that those changes, if left in place, will create a recession beginning in early 2013. Minnesota’s economy would be hit hard,” with a material reduction expected in state economic growth and revenues in the next biennium, the forecast warns. Revenues could fall by 5%.

The state updates its forecast in February and those figures are used by the Legislature as it considers Dayton’s budget.

Dayton, a member of the Democratic-Farmer-Labor Party, is expected to attempt an overhaul of the state’s tax system. Dayton will enjoy a majority in the Legislature next year. Republicans, who lost their majority in the November election, last year blocked his attempts to raise income taxes on top earners to help wipe out what originally was a $5 billion shortfall.

The two sides whittled their differences down to $1.4 billion through cuts and school payment delays, but they were stuck there until Dayton agreed to go along with a Republican proposal for further school payment delays and a tobacco bond sale that generated $640 million in budget relief to end a partial state government shutdown.

The state typically passes a capital budget known as the bonding bill in the year following adoption of an operating budget although last year it approved a special $500 million supplemental bonding bill as part of the agreement that ended the budget stalemate.

The stalemate and heavy use of one-time revenues to erase red ink in the $35 billion budget drove negative credit action. Standard & Poor’s rates Minnesota AA-plus and Moody’s Investors Service rates the credit an equivalent Aa1 with a negative outlook. Fitch Ratings rates the state’s $6 billion of GOs to AA-plus.

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