Viewpoint: Minnesota’s budget problem is growingThe February Forecast, one of two economic reports lawmakers receive each year, was released last week.
By: Katie Sieben, South Washington County Bulletin
The February Forecast, one of two economic reports lawmakers receive each year, was released last week. It showed that there is a modest improvement in the state’s short-term financial situation, but next year the state’s budget deficit will be even larger than expected.
The previous forecast, released in November, showed that Minnesota was facing a $1.2 billion shortfall in the current two-year budget cycle. This latest report shows the current deficit at $994 million, thanks to new federal funding and decreased state spending.
However, when we look forward into the next biennium, Minnesota now faces a much bigger budget challenge. When the 2011 session begins, lawmakers will confront a budget deficit of $5.8 billion. This forecasted deficit is almost $400 million worse than was predicted in November.
Though we’re beginning to see some small signs of economic recovery, this forecast shows that Minnesota still faces some very serious long-term challenges. It’s important that we begin to tackle these problems this session by putting together a budget-balancing plan that prioritizes state spending and brings long-term stability to our finances.
We also need to continue our focus on growing jobs and jumpstarting Minnesota’s economy. The newest jobs report shows Minnesota’s employers added 15,600 jobs in January, but economists warn it may take years to regain the 150,000 jobs lost in 2008 and 2009.
Minnesota’s budget simply can’t be fixed without getting people back to work. We’ve already approved a capital investment package that would create more than 20,000 jobs by making improvements to the state’s bridges, rail and transit systems; college campuses; public utilities; and parks and trails. Though this package received bipartisan support in both the House and Senate, the governor has stalled this job creation by threatening a veto. To move forward with these vital jobs, the Legislature is in negotiations with the governor on developing a compromise that can be signed into law.
Now that the February Forecast has been released, legislative committees will begin pulling together their budgets, which will include significant cuts needed to balance Minnesota’s budget. Lawmakers are also working on a variety of initiatives to promote economic development and job creation in our state, including tax incentives for investments in emerging, technology-driven businesses. When our small businesses are successful, jobs can be created.
Addressing Minnesota’s long-term budget problems will require both cuts to the state’s budget and innovative ways to revitalize the economy. This session, we must move forward with an economic development strategy that accomplishes these goals.