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State Representative Tim Faust
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-0518
For more information contact: Michael Howard 651-296-8873
NEWS COLUMN
ECONOMIC FORECAST SHOWS WORSENING ECONOMY
The economic forecast revealed at the State Capitol this past week illustrated what most Minnesotans have been experiencing for months – a serious recession affecting families, businesses and communities. However, the forecast helped point us in the right direction in how to most wisely balance our budget and position Minnesota toward a stronger economic future.
Since our last forecast in December, the size of our budget deficit has grown from $4.8 billion to $6.4 billion, the largest budget deficit in the history of our state. One-time money coming to Minnesota as part of the federal recovery act will help cushion the deficit by about $1.8 billion, leaving a $4.6 billion hole in the state budget.
The most troubling news in the forecast was the outlook on job losses and prolonged length of the recession. State Economist Tom Stinson said it appears this national recession will be the longest and deepest since World War II and could last through 2009. There is hope it will begin to subside by the end of this year, but this remains a very fluid situation.
Since the recession began in 2008, Minnesotans have lost 50,000 jobs and by 2010 the number of job losses could reach 120,000. To put the dramatic job losses in perspective, in an average year Minnesota creates about 40,000 new jobs. So by the end of this recession, Minnesota will have lost three entire years of job growth. These numbers would be significantly worse if not for the federal recovery act, which is expected to create about 45,000 jobs.
Along with the toll these job losses are taking on families and communities, they are also severely affecting state revenue collection and our state budget. In the three months since our last forecast revenue has fallen by nearly $1.2 billion, a damaging drop in a short period of time. The job losses brought on by this recession is the chief driver of the steep revenue problem responsible for our budget deficit.
For months legislative committees have held over 100 hearings on the budget to get prepared to make the difficult decisions required to solve this deficit. With this forecast, we now have a clearer idea of the mission and are ready to pursue an aggressive timeline to responsibly balance this unprecedented budget deficit.
With so many families making cutbacks in their own budgets, so to must the Legislature. Our budget solution must begin with targeted spending cuts focused to minimize job losses and the pain already being felt by Minnesotans. Part of this efficient budgeting will require us to forgo new spending priorities. The current budget proposal of the Governor’s includes about $800 million in new spending and corporate tax cuts for various projects and programs, some of which are good ideas. However, with a $4.6 billion deficit we have to be responsible enough to put some of these good ideas on hold whether they are Democrat or Republican led proposals. In a time like this we have to focus on the essential, core services of state government.
Over the next months we will debate the various options available to balance the state budget and it’s important we consider the merits of every serious idea or proposal. I look forward to talking about and discussing all of these options with you. By working together, we can pass a balanced budget that reflects our shared vision for a Minnesota with world-class schools, safe communities and a stronger economy.
I continue to welcome your ideas and comments on the state budget and encourage you to stay in touch. If you have further questions for me, reach me by phone (651) 296-0518, by e-mail at rep.tim.faust@house.mn, or by mail at 567 State Office Building, St. Paul, MN 55155.
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