This story was originally published by MPR News.

After slimming the size of Minnesota’s budget this spring, state lawmakers learn Thursday if they have erased red ink into the future or have a projected deficit yet to fix. 

A state economic forecast will provide both short- and long-term looks at Minnesota’s finances, driven by decisions made here and by national economic conditions they have less control over.

A closely divided Minnesota Legislature had already taken some steps to contain spending and put a dent in what was shaping up as a nearly $6 billion shortfall through mid-2029. The two-year budget enacted this summer trimmed that potential deficit to a projected $1.1 billion. 

The latest two-year budget calls for state spending of about $66.8 billion, higher if inflation is included. That was a dip from the budget that preceded it.

A report wrapping up the last two-year budget showed the state came out with nearly $1 billion more on the bottom line than previously projected. But October revenues came in lower than what were anticipated. That’s the last monthly report prior to this forecast.

The economic forecast surveys both anticipated revenue and spending obligations to determine if the numbers balance out. There typically is a mismatch.

When there is more money than needed to pay the bills, it can lead to tax cuts or augmented spending on priority programs. When there is less money, it can force spending cuts, accounting shifts, tax increases or use of the rainy day reserves to patch the anticipated hole.

Minnesota’s budget reserve is at an all-time high at more than $3 billion. By law, a portion of any surplus shown in the late-fall forecast gets directed automatically into the reserve account.

Because of the federal government shutdown, state economists didn’t have all of the usual data at its disposal, such as recent employment and inflation figures.

State leaders say rising health care costs and federal policy changes to social service programs will also play a factor.