Minnesota finance officials recently released the February Forecast, which is one of two economic reports lawmakers receive each year. This report shows a modest improvement for the state’s fiscal situation in the short-term, but an even larger-than-expected problem in the next biennium.
In November, the forecast showed the state facing a $1.2 billion shortfall in the current budget cycle. The state’s deficit now stands at $994 million, thanks largely to new federal funding.
However, looking forward into the next two-year budget cycle, the state faces a much bigger challenge than was previously predicted. In 2011, lawmakers will confront a $5.8 billion budget deficit, which grows to $7 or $8 billion when inflation and other spending pressures are factored in. This deficit is almost $400 million worse than predicted in November.
“Though we’re beginning to see some modest signs of economic recovery, it’s clear that Minnesota is still facing some very serious budget challenges,” said Sen. Kubly. “While things look slightly better in the near term, they’re getting worse in the future. It seems to me that if we want to bring stability back to the state’s finances, we’re going to need to find a long-term budget solution that prioritizes state spending and revitalizes the economy.”
Sen. Kubly said the Legislature’s focus continues to be on growing jobs. 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 Minnesota lost in 2008 and 2009.
“It seems to me that we won’t be able to fix Minnesota’s budget without getting folks back to work,” said Sen. Kubly. “The Legislature has already approved a capital investment package that would create 20,000 jobs throughout the state. Even though it passed both bodies of the Legislature with bipartisan support, the governor threatened a veto. We’re now in negotiation on a compromise so that we will hopefully move forward with these jobs.”
Sen. Kubly said now that the February Forecast has been released, legislative committees will begin putting together their budget recommendations, which will include substantial state spending cuts. Additionally, the Legislature is exploring a wide variety of economic-development initiatives, including tax incentives designed to spur private investments in emerging, technology-based businesses that provide high-quality jobs.
“Getting our state back on track is going to require both spending cuts and initiatives to revitalize the economy,” said Sen. Kubly. “I’m hopeful that by the end of session, we’ll have a long-term budget-balancing strategy in place and economic development and job creation plans underway.”
Anyone with comments or questions can contact Sen. Kubly at 301 State Capitol, 75 Rev. Dr. Martin Luther King, Jr. Blvd., St. Paul, MN 55155-1606, sen.gary.kubly@senate.mn, or 651-296-5094.
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Minnesota finance officials recently released the February Forecast, which is one of two economic reports lawmakers receive each year. This report shows a modest improvement for the state’s fiscal situation in the short-term, but an even larger-than-expected problem in the next biennium.
In November, the forecast showed the state facing a $1.2 billion shortfall in the current budget cycle. The state’s deficit now stands at $994 million, thanks largely to new federal funding.
However, looking forward into the next two-year budget cycle, the state faces a much bigger challenge than was previously predicted. In 2011, lawmakers will confront a $5.8 billion budget deficit, which grows to $7 or $8 billion when inflation and other spending pressures are factored in. This deficit is almost $400 million worse than predicted in November.
“Though we’re beginning to see some modest signs of economic recovery, it’s clear that Minnesota is still facing some very serious budget challenges,” said Sen. Kubly. “While things look slightly better in the near term, they’re getting worse in the future. It seems to me that if we want to bring stability back to the state’s finances, we’re going to need to find a long-term budget solution that prioritizes state spending and revitalizes the economy.”
Sen. Kubly said the Legislature’s focus continues to be on growing jobs. 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 Minnesota lost in 2008 and 2009.
“It seems to me that we won’t be able to fix Minnesota’s budget without getting folks back to work,” said Sen. Kubly. “The Legislature has already approved a capital investment package that would create 20,000 jobs throughout the state. Even though it passed both bodies of the Legislature with bipartisan support, the governor threatened a veto. We’re now in negotiation on a compromise so that we will hopefully move forward with these jobs.”
Sen. Kubly said now that the February Forecast has been released, legislative committees will begin putting together their budget recommendations, which will include substantial state spending cuts. Additionally, the Legislature is exploring a wide variety of economic-development initiatives, including tax incentives designed to spur private investments in emerging, technology-based businesses that provide high-quality jobs.
“Getting our state back on track is going to require both spending cuts and initiatives to revitalize the economy,” said Sen. Kubly. “I’m hopeful that by the end of session, we’ll have a long-term budget-balancing strategy in place and economic development and job creation plans underway.”
Anyone with comments or questions can contact Sen. Kubly at 301 State Capitol, 75 Rev. Dr. Martin Luther King, Jr. Blvd., St. Paul, MN 55155-1606, sen.gary.kubly@senate.mn, or 651-296-5094.
