With almost every news outlet and politician in the state commenting on Minnesota’s budget deficit, what’s left to say? The numbers are bad: a $426 million deficit for the fiscal year ending June 30, 2009, plus a projected $4.8 billion deficit for the 2010-2011 biennium add up to $5.273 billion dollar total. State economist Tom Stinson said this could be the worst recession since World War II. (Excuse me, wouldn’t that make it the worst since the Great Depression?) He said today’s budget forecast was not a worst-case scenario, and that the situation “could be noticeably worse between now and the end of the biennium.” The next budget forecast will come in February.
Finance and Commerce notes that “neither GOP Gov. Tim Pawlenty nor the DFL leaders of the Legislature offered any specific ideas for how they might even come close to erasing that huge hole in the state’s general fund.” In a related article, Finance and Commerce says that, in an effort to “jump-start a dismal economy with steam shovels and bulldozers, state lawmakers expect to propose a bigger-than-expected package of public works projects during the upcoming legislative session.”
Pawlenty remains consistent, insisting that no new taxes are on the table, and suggesting that health care could take some cuts.
Over at Growth & Justice, Dane Smith lays out three important facts to keep in mind when considering the deficit and responses. From the Minnesota House, Session Daily reports reactions and links to the actual forecast document.
While promising a more detailed analysis in the near future, Minnesota 2020 points out:
The mushrooming of the state deficit from the May projections to the November forecast is almost entirely the result of declining state revenue. In short, Minnesota has a revenue problem, not a spending problem.