Budget Outlook Stable

• Projected balance improves to $1.513 billion for FY 2020-21, $181 million higher than November

• Budget reserve remains at $2.359 billion

• FY 2022-23 continues to show structural balance, however budget challenges remain

• Economic outlook stable, slowdown remains in forecast

2

U.S. Outlook Stable;Slowdown Remains in Forecast

2.32.1 2.0

1.6 1.5

2.32.1 2.0

1.71.5

2.4

2.9

0

1

2

3

4

2017 2018 2019F 2020F 2021F 2022F 2023F

November 2019February 2020

Real Gross Domestic ProductAnnual Percent Change

Source: U.S. Bureau of Economic Analysis (BEA), IHS Economics (IHS)3

State Unemployment Rate has Risen; Remains Below U.S. Rate

3.5%

3.3%

0%

2%

4%

6%

8%

10%

12%

1990 1995 2000 2005 2010 2015

U.S.

Minnesota

Unemployment RateMonthly, Seasonally Adjusted

Source: MN Department of Employment and Economic Development (DEED)

U.S. Recession

10+ Years

Revenue Forecast 0.2% Higher

($ in millions)

FY 2020-21 Feb. Forecast

ForecastChange

Individual Income Tax $25,988 $(51)General Sales Tax 12,044 (81)Corporate Franchise Tax 3,114 217All Other Revenue 7,606 11

Total Revenue $48,752 $96

5

Forecast Risks

Consumer confidence

Financial market volatility

Trade policy uncertainty

Prolonged and widespread virus outbreak

16 months remain until the end of FY 2020-216

Overall Spending Forecast Down 0.2%

($ in millions)

FY 2020-21 Feb. Forecast

ForecastChange

E-12 Education $19,999 $(99)Property Tax Aids & Credits 3,872 7Health & Human Services 14,682 5Debt Service 1,130 (2)Other 8,689 (2)

Total Spending $48,373 $(91)

7

Current Biennium’s Balance Increases

($ in millions)FY 2020-21

Nov. ForecastFY 2020-21

Feb. ForecastForecastChange

Beginning Balance $3,971 $3,971 $ -

Revenues 48,656 48,752 96

Spending 48,463 48,373 (91)

Budget Reserve 2,359 2,359 -

Cash Flow Account 350 350 -

Stadium Reserve 124 130 6

Budgetary Balance $1,332 $1,513 $181

8

Planning Estimates

9

($ in millions) FY 2020-21 FY 2022-23BiennialGrowth

Annualized % Growth

Forecast Revenues $48,752 $51,501 $2,749 2.8%

Projected Spending 48,373 51,036 2,633 2.7%

Structural Balance $379 $465

Estimated Inflation n/a $1,119

Current Law Reserve Changes in FY 2022-23

10

($ in millions) FY 2020-21 FY 2022-23Reserve Change

Budget Reserve $2,359 $1,867 $-491

Cash Flow Account 350 350 -

Stadium Reserve 130 263 +133

Budget Reserve

$0 $9

$658 $656 $661

$994

$1,597 $1,603 $1,698

$2,075

$2,359 $2,359

$1,867 $1,867

0

500

1,000

1,500

2,000

2,500

Budget Reserve: FY 2010 - 23($ in millions)

FY 2020-21 Balance: $2.359 billion$491Mj

11

Inflationary Estimate

($ in millions) FY 2020-21 FY 2022-23BiennialGrowth

Annualized % Growth

Forecast Revenues $48,752 $51,501 $2,749 2.8%

Projected Spending 48,373 51,036 2,633 2.7%

Structural Balance $379 $465

Estimated Inflation n/a $1,119

12