BUDGET WOES IN DOUBLE TIME
02/29/08
It was expected but that doesn't mean it will be any
less painful. The February budget forecast was
released Thursday and predicted a $935 million budget
deficit for the remainder of the fiscal biennium.
That is more than twice the $373 deficit predicted
back in November. The housing crisis, rising energy
prices, job losses and lower than predicted tax
revenues are all to blame for the current downturn.
The state is expected to be in a recession until the
3rd quarter of 2008, when the federal economic
stimulus package should give the economy a boost for
the remainder of the year. Early 2009 looks bleak,
however, and legislators were cautioned by the state
economist to leave some room for an even dimmer
outlook in the event the economy worsens.
Translation: don't drain the state's budget reserves.
Governor Pawlenty described the deficit as "serious but solvable" and will release his recommendations to remedy the deficit next week. That proposal will include spending cuts and probably the use of some reserves, but no tax increases. Legislators are holding off on discussing any specifics until they see the Governor's proposal, but DFL leadership said his plan would not be "dead on arrival." They also voiced their hopes that Pawlenty would put forth an effort not just to solve the current budget crisis but to help stabilize the state's economy for future years, as well. Senate Majority Leader Larry Pogemiller (DFL-Minneapolis), whose past working relationship with Governor Pawlenty has a cantankerous track record, told reporters he wants to be "collaborative and patient with him (the Governor)" on a budget solution.
Governor Pawlenty described the deficit as "serious but solvable" and will release his recommendations to remedy the deficit next week. That proposal will include spending cuts and probably the use of some reserves, but no tax increases. Legislators are holding off on discussing any specifics until they see the Governor's proposal, but DFL leadership said his plan would not be "dead on arrival." They also voiced their hopes that Pawlenty would put forth an effort not just to solve the current budget crisis but to help stabilize the state's economy for future years, as well. Senate Majority Leader Larry Pogemiller (DFL-Minneapolis), whose past working relationship with Governor Pawlenty has a cantankerous track record, told reporters he wants to be "collaborative and patient with him (the Governor)" on a budget solution.