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Legislative Update: May 5, 2020

Posted By EDAM Staff, Tuesday, May 5, 2020

The economic dislocations caused by the COVID-19 pandemic are having dramatic consequences for businesses and government entities alike.  Governor Walz requested a somewhat more detailed budget and economic outlook for May as a basis for any budget activity that may be forthcoming from the 2020 Legislative Session. 

The report from Minnesota Management and Budget (MMB) presents a significant challenge for the state. The projected surplus of $1.5 billion has vanished – replaced by a deficit of $2.426 billion. The state budget reserve, or Rainy Day Fund, is available to fill gaps created by the reduction of business activity and corresponding loss of revenue. 

Probably the most significant statement in the May budget outlook is provided in the final sentence of the single paragraph which MMB used to transmit the budget and economic outlook: “Given the uncertainty about the path of the pandemic, the economic outlook will remain volatile for some time.”

The new budget update will be the basis on which end of session negotiations are conducted. House Republicans have drawn a line in the sand stating that they will not work to pass a bonding bill until the Governor ends the peace time emergency. With less than two weeks before the Legislature is set to adjourn we expect negotiations on bonding, the state budget, allocation of federal emergency funds, and the extension of the peace time emergency to be the main focus of the Legislature.

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