1. Budget & Economic Forecast NOVEMBER 2013 MINNESOTA MANAGEMENT & BUDGET MMB.STATE.MN.US December 5, 2013

2. $825 Million Budget Balance Projected for FY 2014-15 ($ in millions) November Forecast Beginning Balance $1,712 Revenues 39,209 Spending 38,807 Reserves 1,011 Stadium Reserve 19 Forecast Balance $1,086 School Shift Buyback246 Repay Airports Fund15 Available Balance $825

3. U.S Economic Outlook is Slightly Weaker Source: Global Insight (GI)

4. Minnesota’s Economy Remains Strong

5. Significant Gain in Forecast Revenues ($ in millions) FY 2014-15$ Change Income $19,372 $496 Sales 10,194 64 Corporate 2,675 254 Statewide Property Tax 1,670 (16) Other Tax Revenue 3,541 27 Taxes Subtotal $37,451 $824 Non-tax Revenues 1,427(22) Other Resources 331 (15) Total Revenues $39,209 $787

6. Revenue Forecast Uncertainties Federal policy issues –Early 2014 fiscal policy deadlines –Federal reserve actions Continuing economic recovery –Manufacturing –Construction Income shifting in response to federal taxes More revenue from less predictable sources –Non-wage income –Corporate profits

7. Little Change in Spending After Forecast Buybacks ($ in millions) FY 2014-15$ Change K-12 Education $16,409 $(10) Property Tax Aids & Credits 2,946 (70) Health & Human Services 11,327 (117) Debt Service 1,252 (28) All Other 6,872 (21) Total Spending $38,806 $(247) School Shift Buyback246 Repay Airports Fund 15 Total Spending After Buyback $39,067$13

8. Positive Forecasts Have Restored Reserves and Repaid Accounting Shifts ($ in millions) Cash Flow Budget Reserve K-12 Shift Buyback Airports FundTotal November 2011$255$621--$876 February 2012-10313-323 November 2012-61,324-1,330 February 2013 - 13 282- 295 October 2013--636- November 2013 - - 246 15 261 Total$255$650$2,801$15$3,721

9. End of Session FY 2016-17 November FY 2016-17$ Change Revenues $41,460 $42,981 $1,521 Spending* 40,738 40,783 45 Difference $722 $2,197 $1,476 FY 2016-17 Planning Estimates Improve * Spending not adjusted for general inflation – adjusting for inflation would increase spending by $384 million in 2016 and $790 million in 2017