Minnesota's economic outlook is ticking upward, with the state budget agency forecasting Tuesday a $1.65 billion budget surplus for Gov. Mark Dayton and state lawmakers to work with in the current legislative session.
That's up from a December estimate of $1.4 billion. The projected surplus is the main measure by which Dayton and lawmakers will make decisions about state spending levels for the next two years.
Budget officials said that while the state's economic situation has improved, "federal policy unknowns create significant risk" for the state's finances. That's a nod to uncertainty around the priorities and actions of the new Trump administration and Republican majorities in the U.S. Congress.
Dayton echoed that caution on Tuesday, saying that a recent meeting of governors and Trump administration officials left him with unanswered questions.
"The uncertainty surrounding this budget forecast demands extreme caution and restraint from my administration, the legislature and various affected interest groups," he said. "We worked hard to achieve these budget surpluses, and they must be preserved."
Republican leaders, including House Speaker Kurt Daudt and Senate Majority Leader Paul Gazelka, said the state's surplus indicates that Minnesota is in a solid financial position and should return at least some of the money in the form of tax cuts or credits.
Daudt said Dayton's $45.8 billion budget plan, released in late January, expands the state government's budget at a rate that doesn't match up with the budgets of many of the state's residents.
"We'd like to leave a little more money on the bottom line of Minnesotans," he said. "We think we should give some of that back, reinvest in Minnesotans, put Minnesotans first.
The governor's initial plan, which will be revised by mid-March, proposed using the initial projected surplus to help with priorities like expanding prekindergarten programs, increasing funding for public universities and expanding the state's MinnesotaCare public health program to serve more people. Republican lawmakers, who hold majorities in both the state House and Senate, have focused on reducing taxes, and spending on areas like improving roads and bridges.
The updated forecast included new state and national projections on areas like taxes, income and school enrollment.
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