Minnesota commercial property owners are as wary of headlines in 2020 as anyone else. This has been a bruising year that includes an ongoing recession brought on by the coronavirus pandemic, as well as the Minneapolis riots triggered by the death of George Floyd that resulted in damage to more than 1,000 commercial properties in the city.
No one is surprised then that the Minnesota state government is now facing grim budget prospects. Earlier this year, the state budget office said it expected a $2.4 billion deficit for the two-year budget period that will end in July 2021. More recently, the same office issued an even grimmer estimate of what the recession will do to the next two-year budget: an even bigger deficit of $4.7 billion.
Because those deficit projections are daunting, many expect the state to try to fix the shortfalls with tax increases that could result in hikes in commercial property tax bills.
Rainy day monies
However, there’s a noticeable absence of panic among state legislators – and an absence of calls to raise taxes – perhaps due to the $2.3 billion “rainy day” fund that Minnesota has in its back pocket. Many believe the substantial fund has cushioned the reversal of the state’s budget fortunes and allowed lawmakers to take a wait-and-see approach to dealing with the recession’s impact on revenues.
The Faribault Daily News recently noted that Gov. Tim Walz saved the state some money here and there, including a hiring freeze for state government jobs not considered essential for pandemic response, “a mostly symbolic pay cut for commissioners” and some job cuts at the Minnesota Department of Corrections.
We’ll have more on Minnesota’s looming budget shortfalls in a coming post. Please check back.