Stimulus details sketchy

Now that President Obama has signed the federal economic stimulus act, Gov. Tim Pawlenty’s biennial budget will need an adjustment, or nearly a complete do-over, according to House Speaker Margaret Anderson Kelliher (DFL-Mpls).

Details of Minnesota’s cut of the federal funds (as much as $2 billion to $3 billion in direct appropriations) are still sketchy, and so are its effect on the state’s projected deficit that the governor said could be around $7 billion.

Tom Hanson, Minnesota Management and Budget commissioner and the state’s federal stimulus coordinator, updated the Legislative Commission on Planning and Fiscal Policy Feb. 18 on progress to make the state ready for the money. A core group of agency heads has been formed to work with Hanson, but he said a framework needs to be developed for funding projects (that may have to first be approved by the Legislature) and a grant process established.

Among the uncertainty is the certainty that Pawlenty will need to revisit his 2010-2011 biennial budget as some of his proposed cuts to human services and shifts in education to balance the budget could make the state ineligible for these one-time federal funds.

With release of the February Forecast (used to determine the state’s 2010-2011 biennial budget) set for March 3, Sen. Linda Berglin (DFL-Mpls) questioned Hanson for a timeline as to when numbers would be formalized and the governor’s new recommendations would be ready so legislators can adequately prepare budgets and end session on time.

“We are going to have to sprint to the end to make a May 18 adjournment date,” Kelliher said. She emphasized the importance that allocation of the stimulus money be transparent and have a strict audit control.

State Budget Director Jim Schowalter laid out a tentative three-month timeline for stimulus activities, but emphasized that it could change as more information becomes available.