CHICAGO -- Rising income tax revenue and lower healthcare spending have pushed Minnesota's projected budget surplus beyond $1 billion.
The Minnesota Management and Budget Office released the updated surplus projection Thursday.
Gov. Mark Dayton will use the figures to help craft a new two-year budget, which he will present on Jan. 27.
The state will refresh its projections again in February, and state lawmakers will use the latest figures to craft a final 2016-2017 spending plan.
The newest fiscal forecast shows a surplus of $1.037 billion available for the upcoming 2016-2017 biennium. That includes a $373 million ending balance forecast for the current 2014-2015 biennium, after $183 million is automatically diverted from the full projected $556 million balance to the state budget reserve under a new state law.
In a press conference discussing the projections, Dayton said he hopes to use some of the money to pay for a childcare tax credit, as well as improved broadband access for the entire state and early childhood scholarships, according to local reports.
The governor, who just won a second term, also said the surplus means a new tax increase is unlikely, unless it was for transportation, reports said.
The latest figures provide a stark contrast to Minnesota's fiscal position just a few years ago when the state was facing a $5 billion deficit.
The growth in income tax revenue comes in part from a tax increase on the state's wealthiest residents pushed by Dayton and approved last year.
Overall, Minnesota tax revenues are now projected to climb 7.1% in the 2016-2017 biennium compared to the current two-year period, according to the state. Tax revenue is projected to total $40.25 billion in fiscal 2016-2017, compared to $37.58 billion in the 2014-2015 period. Driving that increase is an expected 10.4% jump in individual income taxes, state figures show. Sales tax revenue is expected to increase 5.9%.
Total revenues, including tax and non-tax sources, are expected to total $41.88 billion in 2016-2017 compared to $39.37 billion in the current period, an increase of 6.4%.
Spending forecasts, meanwhile, have been revised downward, with the new two-year budget expected to total $41.2 billion in spending, up 4.8% from the current two-year budget spending. Spending on K-12 education is set to drop by $60 million in the upcoming budget compared to the current budget, and the Health and Human Services fund is expected to drop by $443 million.