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f4*(3 rT A Lemur n Cit.eprorno ting excellence Gt ie s ties Iletin n Number 29 November 29, 1996 I � State budget forecast optimistic Gary Carlson school levy recognition shift from the difficult to assess. Between now and The State Department of Finance current 18 percent to seven percent. January 7,we will likely see many The levy recognition shift was an proposals for spending the projected announced that the state will collect accounting maneuver first used in the surplus. However,keep in mind that expenditures through the end of the billion more than anticipated early 1980s to effectively borrow much of the$1.4 billion surplus is only expenditures school property taxes to balance the a projection. T 1998-99 biennium. Although the news state's budget. was not totally unexpected, it did run [he state is also required to set counter to several state budget studies aside the next$114 million of any The next issue of Cities that previously painted a gloomy additional surplus in an account to Bulletin will be mailed picture of the state's fiscal situation. eliminate the balance of the levy December 18 and will be the The Weber-Brandl report suggested recognition shift. In addition,state law that the state could have faced a deficit only issue published in requires that any additional surplus be of$812 million by the end of the 1998- used to increase the state school aid December. The weekly • 99 biennium while the"Within Our payment schedule to recognize that 90 Bulletin publication schedule Means"study suggested a$600 million percent of the state aids are paid in the will begin as the Legislature deficit. current year rather than the current 85 Current biennium convenes January 7, 1997. percent. i Most of the projected surplus can percent. be credited to a very strong Minnesota The outlook for the 1998-99 economy. State revenues for the biennium is similarly optimistic. The The League sends the Cities balance of the current 1996-97 bien- surplus of projected revenues over Bulletin to the mayor and to the nium are now expected to total $19.1 current law expenditures is expected to administrator or clerk. Be sure to billion,or$646 million more than the route it to your councilmembers total$916 million for the biennium. projections prepared at the end of the When added to the current biennial and department heads. 1996 legislative session. State expen- surplus,the state's total forecasted ditures for the balance of the current current law surplus is estimated to be biennium are now expected to total $1.4 billion above the current$611 $18.6 billion,down by$209 million cash flow and budget reserve amount. from the end of session forecast. Governor's plan By the end of the current bien- Governor Arne Carlson announced nium,the state is expected to have a that he will propose a three-way split of $522 million budget surplus. This the surplus. Although details of his surplus is computed after several plan will not be completed until early current law surplus commitments are next year,he did suggest that he would financed and it does not include the propose increasing the state's budget revenues set aside in the state's$350 reserve,dedicatincr money for an million cash flow account and$261 education reserve and school shift buy million budget reserve. back and using a portion of the surplus Current law surplus commitments for tax cuts for individual taxpayers. • Under current state law,the Overview legislature must use$180 million of The impact of the rosy budget any surplus revenues to buy back the situation on the upcoming session is