According to the state’s November fiscal forecast, Minnesota faces a projected $4.8 billion shortfall for 2010-11, and an additional $426 million for the current budget year. The forecast, derived from numerous economic factors and trends, is a snapshot of the state’s fiscal landscape used by the Legislature and governor to help develop the state’s upcoming biennial budget.
The fiscal news came as no surprise, as unemployment rose to 6.0 percent and the state lost 7,500 jobs in October. This year, Minnesota dropped 25,900 seasonally adjusted jobs from January through October.
Gov. Pawlenty and other governors met with President-elect Obama in early December to discuss a possible economic stimulus package that may include aid for states facing budget deficits. It is estimated that 41 of the 50 states are expecting to face budget shortfalls next year. Governor Pawlenty has reacted cautiously to the plan, despite the fact that Minnesota ranked 46th in terms of receiving federal tax dollars per tax dollar paid, according to the Tax Foundation. Their report shows Minnesota received only 72 cents for every dollar sent to the federal government in 2005; however, neighboring North Dakota ranked 6th and received $1.68 for every dollar sent in. Minnesota should be getting its fair share of the federal budget outlays. Minnesotans also pay federal income tax..
State Economist Tom Stinson said Minnesota may take longer to come out of recession compared with the rest of the nation. Much of the state’s budget deficit has been created by falling revenues, not by government overspending. Cutting spending will not replace absent revenue. Only business and trade growth can do that. Some experts are projecting a loss of 77,000 additional jobs in 2009. Various legislative working groups, such as the Green Jobs Task Force, already are meeting to discuss how to create jobs in Minnesota both in the short and long-term.
Governor Pawlenty, in his state budget deficit resolution proposal, will not only cut state budget items but will work to drive more service costs toward local government. Under the guise of conservative fiscal restraint, he’ll continue implementing a public policy vision that strangles communities. In the short term, downward budget pressure may seem like a reasonable government limitation. The net result over time, however, is less than the sum of its parts. Our entire state becomes less safe and our quality of life declines precisely because aging communities have a lower property tax base and reduced capacity for public safety services. Fewer cops in one place eventually create crime problems in others.
The Minnesota Senate and House will need to work with the Governor to solve this crisis. We need to find growth strategies that will help bring Minnesota out of a true economic collapse. We ask all constituents to provide us with input on strategies and solutions that will maintain a quality of life we have come to expect in Minnesota.