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State Representative Joyce Peppin
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-7806
For more information contact: Austin Bleess 651-296-5529
NEWS COLUMN
State Budget Challenges Ahead: Minnesota faces worst budget deficit in state history
By Joyce Peppin
State Representative
Last week, the Minnesota Management and Budget (MMB) office released its most recent economic forecast for our state and unfortunately, the news is not good. According to MMB officials, the state is $426 million short for the current budget cycle and, assuming current spending revenue and expenditure trends continue, $4.84 billion in the red for the 2010-2011 biennium. Added together, Minnesota is $5.2 billion in the hole.
The downturn in the national economy is having a dramatic impact on state governments across the country with 41 states facing deficits. Minnesota’s deficit has grown from the nearly $1 billion we had last year and is worse than the $4.6 billion deficit of 2002.
Minnesota’s team of economic experts say tax revenues are down in every major category, with income, sales, corporate, and motor vehicle taxes all seeing significant declines. At the same time, overall spending is increasing by 6.1 percent. Higher spending and declining revenues have led to economic turmoil. So what should the state do?
The first and most immediate need is to balance the current $426 million shortfall. Governor Pawlenty and legislative leaders are working on ways to bridge that gap. If they are unable to reach a compromise, the Governor will use his power to “unallot” or cancel spending, to balance the budget.
The $426 million spending reduction must come from state expenditures scheduled to be incurred between now and June 30, 2009, the end of the state’s fiscal year. Unlike the federal government which can deficit spend, Minnesota has a constitutional requirement for a balanced budget. Thus, no agency, department or program is immune from being reduced in order to balance the budget.
The second priority is to overcome the $4.84 billion deficit and bring revenues and expenditures into line for the 2010-2011 budget. The legislature will be reconvening on January 6 and will have several months to tackle this mammoth undertaking. A significant challenge, yes, but the budget balancing exercise presents opportunities to institute real reforms and bring cost savings and efficiencies to state government that have not been used before.
Minnesota citizens are sacrificing to make ends meet in their personal and business budgets. Thousands are losing their jobs, and the cost of living, with the notable exception of gas, continues to rise. It is only fair that government live within its means instead of continuing on a path of unsustainable spending. State spending has grown more than $10 billion since 2000 (from $24 billion to a $34 billion biannual budget) and continued growth of government budgets to this degree is neither prudent nor responsible.
During the upcoming session, I’ll be sharing more information on Minnesota’s budget challenges and alternative approaches that could be considered. In the meantime, please contact me with your ideas, suggestions and advice on how to balance the budget (rep.joyce.peppin@house.mn or 651.296.7806).
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News Items
- PEPPIN REPORT: FORECAST SHOWS THIRD CONSECUTIVE STATE SURPLUS - (Posted: 2012-12-06 00:00:00)
- A Look Ahead to the 2012 Legislative Session - (Posted: 2012-01-26 00:00:00)
- A Call to Caucus - (Posted: 2012-02-04 00:00:00)
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