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State Representative David Bly
100 Rev. Dr. Martin Luther King Jr. Blvd.
651-296-0171
For more information contact: Michael Howard 651-296-8873
NEWS COLUMN
BUDGET FORECAST REVEALS WORSENING ECONOMY
The Minnesota Department of Finance recently released our economic forecast, showing a worsening Minnesota economy and a growing state budget deficit. The news in the forecast doesn’t make the task of solving our deficit any easier, but it is an important part of the process we go through at the State Capitol to reach a solution to our budget deficit. With a clearer idea of the challenges ahead, we will pursue an aggressive timeline to close a record budget deficit in a manner that reflects our Minnesota values of shared responsibility and shared prosperity.
In the past three months, the state budget deficit grew by $1.6 billion, ballooning to a record $6.4 billion. The increase can mostly be attributed to a drop in expected revenue collection. The steep decline in revenue sends serious signals about the trajectory of our economy, which is still heading in the wrong direction. Our State Economist Tom Stinson predicts the national recession will be the longest since World War II and estimated a total of 120,000 jobs – double the population of Rice County - will be lost in Minnesota from when the recession began in 2008 into 2010. The job losses would be worse if not for the federal recovery act, which will create an estimated 45,000 jobs.
Due to the deep recession, the forecast also projects a $5 billion deficit for the upcoming budget cycle in 2012-13. Since we don’t know how long the recession will last, it’s more important than ever to be fiscally responsible in our planning. Otherwise, we could be setting Minnesota up for an even costlier deficit in the future.
With a deficit of unprecedented size, sacrifices will need to be made and deep spending cuts will be required to close the deficit. Given what we know about our revenue declines that have been brought on by job losses, it will be important to target those cuts in areas that have a minimal impact on jobs in both the private and public sector. If we aren’t careful, our budget solution may make our recession deeper and our future budget problems larger.
For months, legislative committees have been going through the Governor’s budget, as well as seeking public input on how best to craft a solution. I’ve been grateful for the input I have received from residents who attended town hall meetings in Belle Plaine, New Prague, Montgomery and Northfield. It’s now our job in the legislature to pursue and consider all available options and put forth a budget plan that reflects the short and long term vision for our state. We have to put together a budget strategically and fairly. If we conclude that a budget solution focused only on spending cuts and one-time aid would too greatly damage our already struggling economy or jeopardize our future economic stability, then we have to consider ways to fairly raise revenue. And with a record deficit, it’s possible the most balanced approach will require a combination of all three - spending cuts, revenue increases and one-time money.
I’m confident that we will weather these economic storms and emerge a stronger Minnesota. We will accomplish that goal more quickly by passing a state budget that truly balances the difficult sacrifices that will be required to solve the deficit.
News Items
- Rep.-elect Bly Selected as Vice Chair of Housing Finance and Policy Committee - (Posted: Dec 21 2012 12:06PM)
- House Passes Flood Relief for Southern Minnesota in Special Session - (Posted: 2010-10-18 00:00:00)
- Governor signs eminent domain law to protect landowners - (Posted: 2010-05-03 00:00:00)
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