>> CATHY: JOINING US NOW WITH MORE ON THE BIG BUDGET SURPLUS, ERIN CAMPBELL, COMMISSIONER OF MINNESOTA MANAGEMENT AND BUDGET, AFFECTIONATELY KNOWN AS MMB.

WELCOME TO "ALMANAC."

>> THANK YOU.

>> Cathy: LARGER THAN EXPECTED SURPLUS, $3.7 BILLION.

THEN WHY IS EVERYONE TALKING ABOUT NO MORE NEW SPENDING?

>> THE FOCUS IS REALLY ON ONGOING SPENDING FROM MY PERSPECTIVE.

WE DO HAVE A BUDGET SURPLUS IN BOTH THIS BIENNIA AND THE NEXT, $3.7 BILLION THIS BIENNIA AND 2.2 IN THE NEXT BUT WE ALSO HAVE STRUCTURAL IMBALANCE IN THE NEXT BIENNIUM.

SO THAT STRUCTURAL IMBALANCE IS $1.5 BILLION.

THAT LEAVES RESOURCES ON THE BOTTOM LINE, BUT THAT IS ONE-TIME IN NATURE, AS OPPOSED TO ONGOING.

>> Eric: SO YOU GOT -- DON'T HAVE ENOUGH TAX REVENUE TO COVER PROJECTED SPENDING, IS THAT A FAIR WAY TO SAY IT, IF MORE SPENDING OCCURS LIKE THIS SESSION, FOR INSTANCE?

>> YUP.

SO, THE NATURE OF A STRUCTURAL IMBALANCE IS SIMPLY THAT EXPENDITURES ARE EXCEEDING REVENUES.

WE ARE FORTUNATE BECAUSE WE HAVE HAD RECORD SURPLUSES OVER THE LAST COUPLE OF YEARS AND, SO, AT THE END OF THE BIENNIUM, WE ARE ROLLING MONEY OVER INTO THE NEXT.

SO THAT IS WHAT WE WOULD ANTICIPATE HAPPENING IF THERE AREN'T RESOURCES SPENT THIS YEAR, THEY WILL ROLL OVER INTO THE NEXT AND THAT REALLY HELPS TO MITIGATE THE STRUCTURAL IMBALANCE.

>> Cathy: SO A STRUCTURAL IMBALANCE, IS THAT THE SAME THING AS A PROJECTED SHORTFALL?

>> I SUPPOSE YOU COULD -- I MEAN, IT'S -- ULTIMATELY, WE ARE GOING TO HAVE RESOURCES ON THE BOTTOM LINE AND SIGNIFICANT RESOURCES ON THE BOTTOM LINE.

AND, SO, IT'S NOT THAT WE HAVE A SHORTFALL, BECAUSE WE DO HAVE SURPLUSES.

IT IS THAT IN TERMS OF THE ONGOING NATURE OF THAT SPENDING, AT SOME POINT WE EITHER NEED SPENDING TO COME DOWN OR REVENUES TO GO UP.

IN ORDER TO BREAK EVEN.

>> Eric: HOW DOES MINNESOTA FARE WHEN YOU GUYS GO OUT TO NEW YORK AND GET A CREDIT RATING FROM THE BOND HOUSES OR THE CREDIT AGENCIES?

>> WE HAVE FARED VERY WELL.

WE ARE A TRIPLE A STATE AND WE HOPE TO MAINTAIN OUR TRIPLE A RATING.

>> Eric: WHY IS THAT A GOOD THING TO HAVE?

>> BECAUSE IT DECREASES THE COST OF BORROWING.

SO WHEN WE ARE THINKING ABOUT A CAPITAL INVESTMENT BILL, WE WANT TO HAVE THE LOWEST INTEREST RATES POSSIBLE, SO THAT WE'RE SAVING THE STATE AND OUR TAXPAYERS MONEY AND HAVING A HIGH CREDIT RATING MEANS THAT WE GET THE BEST INTEREST RATES.

>> Eric: YOU FOLKS TALK ABOUT POSSIBLE RISKS IN THE FORECAST.

IS THE INCREASED IMMIGRATION AND MAYBE MORE TO COME, IS THAT GOING TO HAVE A SHORT-TERM ISSUE ON WELFARE, HUMAN SERVICES COST?

DO WE KNOW THAT?

>> WELL, IT WASN'T A FACTOR IN THIS FORECAST.

BUT IT WAS A FACTOR IN THE NOVEMBER FORECAST, WHERE WE WERE SEEING AN INCREASE IN ENGLISH LANGUAGE LEARNERS.

YOU KNOW, ON THE OTHER HAND, WE ARE ALSO LOOKING FOR MORE WORKERS IN THE STATE AND, SO, I THINK THAT THERE ARE -- THERE'S MORE THAN ONE DYNAMIC AT PLAY THERE.

>> Cathy: SAY, JUST CURIOUS, HOW DOES THE BUDGET RESERVES PLAY INTO ALL THIS?

>> WE HAVE A FULLY FUNDED BUDGET RESERVE, THAT IS UPDATED EACH NOVEMBER, SO AT THIS FORECAST, WE DIDN'T TOUCH IT, BUT EVERY NOVEMBER, AS PART OF THE FORECAST PROCESS, WE ARE STUDYING HOW MUCH IS IN THE RESERVE AND MAKING SURE THAT THERE'S ENOUGH IN THE RESERVE TO ENSURE THAT IF THERE WAS AN UNEXPECTED DOWNTURN IN REVENUES IN THE BIENNIUM, IN WHICH WE WERE IN, THAT WE WOULD HAVE ENOUGH TO STAY AFLOAT.

>> Eric: AND THE GOVERNOR WILL HAVE HIS SUPPLEMENTAL BUDGET REQUEST OUT IN A COUPLE WEEKS?

>> THAT'S CORRECT, YUP.

>> Eric: APPRECIATE YOU COMING OVER, THANKS.

>> YES, ABSOL