St. Paul, Minn. (AP) - Minnesota's projected budget deficit shrank by a fifth to $5 billion on Monday, prompting Gov. Mark Dayton to withdraw his proposal for a 3 percent temporary surtax on top incomes and reduce proposed cuts to nursing homes and other health and welfare programs.
The forecast from Minnesota Management and Budget officials showed the shortfall for the coming two-year budget was down from an earlier projection of $6.2 billion. State economist Tom Stinson attributed the improvement to federal action that helped the economy, including a payroll tax cut and delay in a capital gains tax hike.
The governor was due to hold a news conference later Monday.
"I characterize this as a modest and certainly helpful improvement in our revenue outlook. There are still quite a few budget challenges ahead," Management and Budget Commissioner Jim Schowalter said at a news conference.
Republicans are expected to outline their budget plan by the end of March. They adamantly oppose
The two sides even disagree on the accuracy of the deficit number itself, with Republicans saying it's overstated because it includes automatic increases in programs such as public health care, which the Legislature could tinker with. Democrats say the gap is bigger than it appears because about $1 billion in inflation isn't counted in the official number.
With federal stimulus dollars drying up,
Twice-yearly forecasts are used to set the budget, giving the most accurate projection of tax collections and spending patterns.
Associated Press writer Patrick Condon contributed to this report.