The November budget forecast released today (Friday) shows Minnesota’s economy is weak, is growing weaker and is threatened by external economic forces that could throw the state into a painful recession.
Minnesota can do little to cope with the weak U.S. dollar and world oil prices, or the bleeding of federal funds for defense that goes abroad or to states more integrated into the military-industrial complex. We can, however, boost economic activity by restoring historical Minnesota investments and commitments to K-12 and higher education, to repairing and building roads and bridges and helping communities and entrepreneurs cope with spiraling health care costs.
Opinion: Budget forecast shows Minnesota’s economy on a slippery slope
The gloomy forecast should have state policymakers pondering ways to stimulate the economy through investing in infrastructure that was given scant attention in the last two decades. It should have lawmakers revisit fairness in the tax codes to restore the concept of taxing according to ability to pay. The current practice of passing tax burdens down to regressive property taxes is contributing to the weakness in the housing sector.
It should also be noted that the state budget reserve of $653 million is sufficient to cover the forecast general fund deficit of $373 million through June 2009. But the projected 3.3 percent decline in sales tax revenue and 14.3 percent decline in corporate tax revenue show that Minnesota is now a weak partner in the national economy.