Who would have ever thought that we would be happy to see Minnesota’s budget deficit at $5.028 billion? But that certainly is the case today. Minnesota Management and Budget (MMB) reported this morning that the previous deficit of $6.188 billion had shrunk by $1.160 billion.

The improved forecast was due to projected general fund revenues increasing by $984 million through the end of the FY 2012-2013 biennium. This improved outlook in state revenues was in large part due to changes in the capital gains forecast. This forecast improved because December’s federal tax compromise delayed a scheduled 5 percentage point increase in the capital gains tax rate until 2013.