Economic Forecast: Financial earthquake hits Minnesota, now the work begins

Talk about it

With the introduction of the latest deficit numbers on March 3, the state now has a better picture of its situation. On the surface the latest figures might sound like our budget deficit situation is improving, those numbers fail to show us the reality of the economic situation that Minnesota will face in this biennium and into the future bienniums.

The determining factor for the 2010-11 budget deficit is the affect of the Federal stimulus money. For quite some time the amount and affect of the Federal stimulus was unknown. Now we know that our state and local governments are eligible for an estimated $4.6 billion in aid to use towards specific purposes. This will create jobs, but what it won’t do, as a source of one-time money, is maintain programs or generate new revenue.

Our ongoing sources of revenue are projected to decrease in the coming years. As our state faces the coming biennium it is projected that the 2012-13 biennium indicate more deficits currently estimated at 5 billion or more. Our budget problems are far from over.

Moreover, the economy here and now won’t recover from the recession with the news of this forecast and stimulus. In 2009, our receipts will be lower than in 2008 according to our state economist, Tom Stinson. By 2010, Minnesota job losses will reach 120,000. That’s three years of job growth in just one year of losses. We haven’t reached the bottom of this recession.

This budget shows us that more than ever; we need to have everything on the table as we approach ways to balance our budget. The governor will have to revisit his budget based on these new figures and the stipulations put forth by the American Recovery and Reinvestment Act (Stimulus). Our financial fall has been cushioned by the stimulus, but the fact remains that we are still falling. Now is the time for the Legislature and Governor to reformulate the way Minnesota does business. It seems that reform only happens during crisis. Now is the time as crisis is upon us. It won’t be easy or popular.

The Legislature is ready to get to the work and deal with the latest deficit and the structure of how state government will be funded in coming years. We have heard from many Minnesotans as to future state priorities. Coupled with citizen input and new information the legislature can start the committee work that will ensure that the priorities presented to us are considered and implemented.

Our economic situation is presently grim, but we can overcome adversity as a united Minnesota.

Tags: daviddill, legislature