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State Representative Jeanne Poppe
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-4193
For more information contact: Sandy Connolly 651-296-8877
NEWS COLUMN
BUDGET DEFICIT MUST BE ADDRESSED DIRECTLY AND HONESTLY
On Tuesday, state economists revealed that Minnesota’s budget deficit has grown from $4.8 billion to almost $6.4 billion. While the gravity of this increase has been masked somewhat by the federal recovery package, which appears to reduce the shortfall that must be addressed during this session to $4.6 billion, the challenges before us remain immense.
State Economist Tom Stinson called this “the longest and deepest recession since World War II". I believe Minnesotans are beginning to understand that the solution to this crisis will not come quickly or easily. To begin with, Minnesota has already lost 50,000 jobs and is projected to lose another 70,000 by the end of next year. Without the federal recovery act, this number was estimated to be 45,000 larger.
To put this into context, during a good year, Minnesota creates 40,000 new jobs; in January, 2009. Already 20,000 jobs were lost. The current unemployment rate in Minnesota stands at 7.6%, which equals the national average, and is expected to grow to as much as 9.4% before recovery begins.
Along with increasing the cost of unemployment, these job losses create an even bigger problem for our state – a loss of revenue. Combined with the drop in payroll taxes, a 33% decline in Capital Gains has sent state revenues plummeting - $1.2 billion has been lost since November, 2008. This significant drop in revenue shatters the myth that what we have is a spending problem. Clearly, we cannot cut our way out of a deficit this size without causing serious harm to many of the things we value.
Without a doubt, the federal stimulus money does provide some relief. It not only decreases the amount of deficit we have to resolve this year, it also limits the amount of cuts that can be made to the Health and Human Services Budget because it requires a state funding match on Medicaid. Under the Governor’s first budget, over 100,000 adults were slated to lose their health insurance. Under the federal recovery act, eligibility for coverage cannot be eliminated, although the amount of reimbursement could be decreased.
The federal recovery act also offers enough new money to make unalloting unnecessary for the current year. In fact, the bottom line of the 2009 budget will actually have a small surplus that can be carried over to be used as needed.
Finally, it must be noted that the federal dollars, while extremely helpful, do not address our long-range economic stability. Current estimates are that Minnesota will face a $5 billion deficit in the 2012-13 biennium. The financial bind our state is in will continue to worsen if we don’t think long-term about fixing the problem. As harsh as it will be, I believe it is important to face the deficit directly. The simple fact of the matter is every aspect of the budget and every corner of the state will be impacted by this budget shortfall.
Please feel free to contact me if you have questions or suggestions regarding our state budget. I can be reached at 1-888-682-3180 or 1-651-296-4193, by mail at 487 State Office Building, 100 Martin Luther King Blvd., St. Paul, MN 55155 or via e-mail at rep.jeanne.poppe@house.mn.
News Items
- POPPE SELECTED AS AGRICULTURE POLICY COMMITTEE CHAIR - (Posted: 2012-11-16 00:00:00)
- Rep. Jeanne Poppe Encourages High School Juniors to Apply for Minnesota House of Representatives Page Program - Application Deadline is November 19th - (Posted: 2012-11-12 00:00:00)
- HORMEL INSTITUTE EXPANSION SIGNED INTO LAW - 2012 legislative session adjourns sine die - (Posted: 2012-05-11 00:00:00)
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