Posted on 02/28/2008 1:07:20 PM PST by LiveFreeOrDie2001
AP: Minn. Budget Deficit Nearly $1 Billion ST. PAUL (AP) ― Minnesota's projected budget deficit nearly tripled Thursday, growing to $935 million and making spending cuts tougher to avoid.
A new economic forecast from state finance officials estimates a shortfall that's roughly 2.7 percent of the two-year budget. But in reality, the sting will be greater because much of this fiscal year is already behind lawmakers and a large chunk of money is already spent.
By law, the budget must be balanced by June 2009.
As the economy has weakened, the state's estimated revenue streams have followed suit. Their projection for money coming in is down $530 million from what was expected in November, including $313 million less in individual income tax and $139 million less in corporate income tax.
The downturn in individual income taxes -- a 2 percent falloff since the November report -- is due to slower growth in wages and decreases in capital gains payments, interest and dividends.
Persistent problems in the housing market, concerns over a credit crunch, high energy prices and downgraded economic growth predictions combine to push the deficit estimate up. The report is based on a mild recession for the first six months of this year.
"The outlook is quite uncertain. The forecast could be better. We could avoid a recession," said State Economist Tom Stinson. "But it also could be worse."
He expects the federal stimulus package to help limit a recession's length, but he said the rebates come too late to prevent damage.
Besides the immediate budget problem, lawmakers are also looking at a deficit of at least $1 billion for the 2010-11 budget, higher if inflation is figured in.
Finance Commissioner Tom Hanson described Thursday's projection as "very concerning, but still manageable."
House Minority Leader Marty Seifert, R-Marshall, pushed for a swift response and having a solution in place as soon as April.
"We need to act now. The difficult decisions get more difficult the longer we wait," Seifert said.
They can use spending cuts, dip into cash reserves, shift money via accounting changes or a approve a combination of those options. Gov. Tim Pawlenty has said he would oppose tax increases, and leading Democratic lawmakers said it would be futile to fight him on it.
Interest groups important to the DFL will pressure them to try, though. Already, Minnesota AFL-CIO Secretary Treasurer Steve Hunter declared it "time to raise revenues."
This is the last forecast before the end to the 2008 session, which is required to conclude in mid-May. The next forecast won't be published until November.
The state has roughly $1 billion in rainy-day reserves, although that money is a one-time patch that can't be used to repair a lasting budget problem. Stinson cautioned against relying too deeply on reserves because "a double-dip recession" that resurfaces in 2009 is a possibility.
Lawmakers might be able to pull in more money by getting rid of a tax break being used by corporations with oversees operations.
But that still leaves a sizable hole, meaning lawmakers will almost certainly resort to spending cuts.
Two areas consume roughly 70 percent of Minnesota's budget: K-12 education and government health care assistance programs.
"My back is up against the fire and the wolves are circling," House K-12 Education Finance Chairwoman Mindy Greiling, DFL-Roseville, said Wednesday. "The idea of K-12 once again being the cash cow to paying the deficit, I'm going to be fighting that tooth and nail."
Unbelieveable.
Now what, are they gonna raise the taxes again...?
Don’t worry thay can always find money for their pet projects.
Its enough to make a guy miss old Jesse Ventura...
Maybe they can put toll booths on the “freeways” and charge toll taxes to make up the deficit to pay for all the PORK.
ALA N.J.
Thus keeping folks from traveling on their roads.
Then maybe tax their feet if the fools walk.
Now what, are they gonna raise the taxes again...?
Of course.
Gee, and this is before an invasion of illegals.
Wait til that happens, Minnesota.
Yeah, the government health care that is taxpayer-subsidized free care for those who don't pay their own way.....is this a great country, or what ?
Minnesotta libereal are pathetic wimps.
Here in CA we have 16 Billion dollar deficit.
Our Liberals are better than their Liberals!!!
Get it? We are giving them a "break". They don't really deserve this money we let them keep so it's not really a tax increase.
The democrats never got over the resentment over being knocked out of 3rd place in the highest taxed states.
WELCOME TO FREE REPUBLIC’S MINNESOTA PING LIST!
91 MEMBERS AND GROWING...!
FREEPMAIL ME IF YOU WANT ON OR OFF THIS LIST!
HEY...........!
That is why I got laid off!
I trained Engineers in Ireland just to have that get me laid off.
I am a “Dislocated Worker” - my job went to Ireland because of tax breaks my company got over there!!
They need to zone areas where the fat can live and eat. The fat will not be allowed elsewhere.
They need to move the military recruiters out of state.
They need to pass bond issues until their credit rating precludes same.
They need to promote free abortions and contraception at the gradeschool level.
Most of all they need to outlaw private schools that have any religious affiliation.
With the above agenda, Minnesota could be come a secular, liberal, Obamanian paradise in just a few short years..
/sarcasm
Wait til that happens, Minnesota.
Heh-heh! That's funny. Minneapolis has the largest population of Somali immigrants in the U.S. thanks to Lutheran Social Services. There's 30 to 40 thousand of them here.
The Latino population is HUGE! Stretches of Lake Street, formerly Scandinavian, look like little Tiajuana. Minneapolis and even the small towns, like Worthington with meat packing plants, are overrun with illegals.
They are already here.
I plead ignorance.
My impression, never having been in your beautiful state, was that you were insulated north from the infestation that is occurring with we sunbelters.
They’re everywhere, they’re everywhere! (with apologies to ChickenMan).
A_F_D
This reduces Governor Palwenty’s chances of being John McCain’s running mate.
If a bridge falls in Minnisota, and G. Bush isn’t President, is it still his fault?
No problem. Take it from the rich.
3M and Pillsbury and General Mills should be able to pay that in taxes with no sweat. They owe the state for being there any way.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.