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Capitol View®
Brian Bakst

Minnesota took in $489 million more than expected in April

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Minnesota tax collections soared well past expectations for April, according to a tally released Friday.

The Department of Minnesota Management and Budget reported revenue that was $489 million above what had been projected to come in.

The excess is 17 percent above expectations for the month. April is when most income tax payments are made, so this update is more pivotal than others.

Minnesota didn't conform to federal tax changes in 2018, so there were a lot of uncertainty about what would happen once filing season arrived and predictions Minnesotans would pay more.

Revenue Commissioner Cynthia Bauerly cautioned against reading too much into the figures because it could relate to timing issues, taxpayer withholding decisions or economic factors at play.

"It's difficult and a little dangerous to attribute any source or cause for those monthly changes," she said.

Most of the extra money -- $388 million -- was from a mix of higher income tax payments and lower refunds. Corporate tax receipts were also higher.

The monthly reports aren’t used by lawmakers in passing a new budget, but the trend lines can help guide their decisions.

MMB Commissioner Myron Frans said he would "advise against making long-term policy decisions based on one month of receipts," noting that there is more volatility as the state's taxpayers adjust to a dramatically different federal tax code.

For the year, tax receipts are now $573 million higher than anticipated, or 3.1 percent.

Senate Taxes Committee Chairman Roger Chamberlain, R- Lino Lakes, said the report doesn't change his view that Minnesota's tax system is out of line with other states and the broader economy is at a fork in the road. He said he will hold firm against tax increases this session.

"The labor shortage the way it is, we can ill afford to push burdensome tax increases and heavy regulatory costs on businesses and individuals," Chamberlain said.

House Majority Leader Ryan Winkler, DFL-Golden Valley, said the stronger tax revenues don't mean the Legislature should back off ambitious proposals this year.

"This increased revenue helps, but does not address the needs of Minnesotans," Winkler said in a written statement. "Meanwhile, Republican budget proposals will result in layoffs, more potholes, and thousands of Minnesotans losing health care. Today's news does not make their budget any less destructive for Minnesotans."

The Legislature does have a projected $1 billion surplus to divvy up from the more-comprehensive economic forecast issued in February. The next full forecast will be released in late November or early December.