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State economy sees mild growth

ST. PAUL - Minnesota state budget writers received some good news Thursday, as a House-Senate conference committee looked at ways to plug a $935 million deficit.

A state Finance Department report showed 4.5 percent revenue growth in February and March, with only the sales tax dropping from earlier projections.

The department drew no conclusions about how the revenue numbers would affect the budget. The next budget forecast is scheduled for November.

Individual income taxes were up 4.5 percent and corporate taxes rose 10.5 percent in the past two months, at a time when many businesses paid bonuses for last year. The sales tax fell 1.6 percent.

Despite the relatively good news, economic uncertainty remains.

The Finance Department report said that all but the most optimistic economists think the country is in a recession. State Economist Tom Stinson has said for weeks Minnesota is in a recession.

"The good news is that this recession is expected to be short and mild," the report said.

In the meantime, a conference committee is looking at differing House and Senate plans to fix the deficit. Like Pawlenty, both bills would close tax loopholes, use surplus funds and cut programs to balance the budget.

However, Pawlenty has said he does not like either the House or Senate proposal.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.