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State Representative Bob Gunther

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Posted: 2011-03-04 00:00:00
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NEWS RELEASE

REP. GUNTHER: ECONOMIC FORECAST IMPROVES SLIGHTLY, BUT DEFICIT REMAINS


ST. PAUL – Is Minnesota’s economy turning the corner?

State economists say Minnesota’s current budget deficit has improved, dropping from $6.2 billion to $5.1 billion. State Representative Bob Gunther (R-Fairmont) said residents should read this news with caution.

“The budget deficit for the 2012-13 cycle is better than expected,” Gunther said. “But when you analyze the projected state spending over the next two years, the good news turns to bad news rather quickly.”

First the good news: An increase in revenue collections, largely from gains in Minnesota’s income and sales taxes, improved the forecast by $984 million. Gunther said this was due in part to the extension of President Bush’s tax cuts.

“That gives us nearly $1 billion more to distribute, and not necessarily for government programs,” Gunther noted. “This is money we could easily use to reduce taxes or to buy back some of the funds that were shifted from our school districts last year.”

State economists noted that revenue collections for this budget cycle have increased to a rate of 8.8 percent, but the rising costs of state government programs wipe out any deficit progress made through increased revenue. State spending is now projected to grow by 29 percent over the next two years, a number Gunther called unsustainable.

“These are very troubling numbers,” Gunther said. “Most Minnesotans would agree that an 8.8-percent raise is plenty for state government programs, but that 29 percent is absolutely unacceptable.”

“Governor Dayton has already given his ideas for eliminating this shortfall, and those ideas would make Minnesota the highest taxed state in the land,” Gunther said. “The Minnesota House will now begin setting budget targets, and I would expect by the end of March we will have approved a budget bill that tackles this significant fiscal problem.”

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