Minnesota Tax Haul Beats Forecast by $244M, But Slowdown Looms

St. Paul, MN (KROC-AM News) - Minnesota tax collections over the past two months exceeded expectations, but the state's economic forecasting consultant is projecting slowing economic activity nationwide.

The latest update from the Minnesota Office of Management and Budget shows the state took in just over $3.7 billion during February and March. That was $244 million, or 7%, higher than what was predicted by the state revenue forecast that was issued in February.

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The report indicates individual income tax payments accounted for most of the positive discrepancy. They totaled just under $1.5 billion. That number is $252 million, or about 20%, higher than anticipated.

Sales tax revenues came in slightly under the forecast at a little over $1 billion and corporate tax payments also missed the target slightly at $511 million. Miscellaneous revenue sources, including various fees paid to the state, were 1.8% higher than predicted at $660 million.

The consultant hired by the state for revenue forecasting is indicating the outlook for the US economy over the next four years has deteriorated significantly during the past two months, but the updated report does not predict a recession. A news release from the Minnesota Office of Management and Budget says the consultant is now expecting a "growth recession," which it describes as defined by low economic growth and rising unemployment.

The report cautions that the outlook could shift to a "recession scenario" if stock and other equity values do not gradually recover over the next several weeks. As it stands now, the consultant is predicting the nation's Gross Domestic Product will grow 1.3% this year and 1.5% in 2026. In February, the GDP was projected to grow 2.3% this year and 2% next year.