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July revenues up, but state's budget future still grim
Minnesota's general fund revenues came in $41 million (or six percent) above forecast in July, the first month of FY 2011, according to Minnesota Management and Budget (MMB). Both income tax and sales tax revenues were higher than expected.
That may be good news, but keep in mind that these revenue estimates are preliminary and could change. The numbers indicate whether state revenues are following the official economic forecast, last issued in February. The February forecast is still the official measuring stick for the state budget until the November forecast is released later this year.
Despite the July revenue uptick, the long-term budget picture does not appear to be improving. Minnesota is still running behind in revenues for the biennium. MMB released the July 2010 Economic Update last month, giving the initial picture of how the state fared in FY 2010, which ended June 30. The preliminary numbers show the state's revenues were $99 million below estimates for the fiscal year, off by about one percent.
Further, MMB is projecting that next biennium's deficit will grow. The state had projected a $5.8 billion deficit for FY 2012-13. The July economic update said: "it appears that the 2012-13 budget gap is likely to be materially wider than end-of-session estimates." For more on the July Economic Update, read our previous blog.