U’s building boom challenged

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The University of Minnesota plans to spend about $1 billion in building new facilities over the next six to 10 years, which is at least as much as the state will face in a budget deficit. Amid a grim state budget outlook, the University will face an uphill battle at the Capitol getting its projects funded. And while it’s unlikely, development that has already been funded could be on the chopping block. The University is in the midst of a building boom which, when orchestrated during a financial crisis, can be a double-edged sword. Building facilities can create construction jobs and draw in money for the state economy, but it can also cost the state large amounts of taxpayer money. Continue Reading

Lawmakers, governor react to nearly $5.3 billion deficit projection

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State officials announced that the nation’s economic downturn has “body-slammed” the state budget, leaving lawmakers and Gov. Tim Pawlenty stuck with a nearly $4.8 billion deficit for the 2010-11 biennium. Minnesota Management and Budget Commissioner Tom Hanson didn’t mince words in presenting the state’s grim November Forecast, which predicts an additional $426 million deficit for the remainder of the current biennium ending June 30, 2009. “This presents a $5.273 billion dollar challenge over the next three years,” Hanson said, summarizing the difficult situation that state leaders will have to negotiate when the upcoming legislative session begins Jan. 6. Pawlenty and legislative leaders reacted swiftly to the announcement, pledging not only budget cuts but also major changes to the state’s budgeting process. Continue Reading

Minnesota revenue loss pushes state $5.5 billion in the red

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The State of Minnesota is expecting a $5.5 billion deficit for the upcoming FY 2010-11 biennium, up from the approximately $2.0 billion deficit that was projected at the end of the 2008 legislative session. State Economist Tom Stinson warns that we could be in the midst of the worst economic situation since World War II. 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. In addressing our whopping deficit, it is important that we not cut investments in education and transportation that stimulate future economic growth; both revenue increases and cautious expenditure reductions need to be considered. Continue Reading

Pertinent facts about Minnesota’s budget forecast

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As we face a multi-billion dollar budget deficit, it’s important to wade through the anecdotes, selective statistics, and calls for more cuts in state spending and remember the three fundamental facts outlined below. Growth & Justice believes these statistics make a strong case against another tax-free budget-balancing strategy, or employing only cuts and shifts and regressive fee increases. Along with many other communities in Minnesota, we think the budget needs to be balanced in part by raising taxes and raising them more fairly, and using those funds to reinvest in the foundation of public investment that has always helped create broad prosperity. The budgets of state and local governments and schools already have been significantly downsized and they are not “the problem.”• The most comprehensive, bottom-line measure of government size and scope is Minnesota’s Price of Government (POG). The POG shows that total state-local revenues as a percent of income stood at about 16 percent in 2008. Continue Reading

Responsible budget forecasting should acknowledge reality

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Back in 2002, House Majority Leader Tim Pawlenty and Senate Majority Leader Roger Moe were gearing up for runs for the governor’s office. However, a looming budget deficit anticipated for the upcoming biennium was a liability for both leaders. Neither man wanted to run for the state’s highest office with the state’s long-term budget deep in the red. The bipartisan solution was politically shrewd but fiscally imprudent. They decided to ignore inflation’s impact on most state expenditures, thereby artificially reducing spending so that in no longer exceeded revenue. Continue Reading

Memo: Pawlenty lays groundwork for massive budget cuts

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Facing “gloomier” economic prospects over the next three years, Gov. Tim Pawlenty’s budget chief has directed every state agency to plan for a broad 5 percent spending cut in the next fiscal biennium. (See attached PDF for text of memo.)
This would produce reductions in state payrolls and other expenditures of at least $1.8 billion, according to the Minnesota Budget Project. That would come on the heels of a 7.8 percent cut in real per capita state general fund spending since 2003 under Pawlenty, which left the current two-year state budget $2.6 billion short of the one enacted before he took office. This persistent disinvestment in Minnesota’s public sector has coincided with the state’s sagging performance compared with other states in personal income, employment and school quality. But the Pawlenty administration has continued to place cutting government among its highest priorities. Continue Reading

Section 8 Program faces imminent housing crisis

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A sign of things to come: an owner of three apartment complexes in Greater Minnesota, notified his low-income and mostly elderly tenants that he will be exiting the U.S. Housing and Urban Development’s (HUD) Section 8 rent-subsidy program in one year. His decision stems from HUD’s failure to pay tenant subsidies for several months last summer. The experience of this building owner marks the beginning of an emerging crisis in the Section 8 program. It could lead to massive displacement of low-income families and the loss of hundreds of thousands of units of affordable housing if nothing is done. The project-based Section 8 program houses 1.3 million low-income households in the US. Continue Reading