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Legislative News and Views - Rep. Lyndon Carlson, Sr. (DFL)

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THROUGH HARD WORK AND SACRIFICE, MINNESOTA WILL RECOVER

Thursday, March 05, 2009
On Tuesday, March 3rd, state economists revealed that Minnesota’s budget deficit has grown from $4.8 billion to almost $6.4 billion. If we utilize the full $1.8 billion in federal Medicaid dollars available to us, the shortfall we will have to reconcile this session is $4.6 billion. At first glance this appears to be an improvement, but the challenges before us remain immense. State Economist Tom Stinson called this “the longest and deepest recession since World War II", and said the state’s economy will likely not resume growing until the end of 2011 or into 2012. I believe Minnesotans are beginning to understand that the solution to this crisis will not come quickly or easily. Minnesota is on track to lose 120,000 jobs by 2010. Thankfully, 45,000 jobs will be saved or created by the federal recovery act. To help put this into context, Minnesota creates 40,000 new jobs during a good year; as of this January, 20,000 jobs have already been lost. The current unemployment rate in Minnesota equals the national average of 7.6%, and is predicted to grow to as much as 9.4% before recovery begins. Along with the personal pain associated with job loss, our state is experiencing a staggering 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 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. Besides decreasing the size of the deficit we need to resolve this year, the federal money also requires the Governor to re-do his budget, especially with regard to his cuts to the Health and Human Services Budget. His original budget proposal would have eliminated health insurance for over 100,000 working adults. As a result of the state match that is required to receive the federal Medical Assistance dollars, approximately 30,000 parents with children will keep their insurance. Finally, it must be noted that the federal dollars 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. We all understand the allure of glossing over future problems to ease the pain of today, but we also know enough to fix a leaky roof before the entire roof needs to be replaced. The hard choices we put off making today will stay with us and cost more in the coming years ahead. Over the course of the dozens of town meetings we have held across the state, it has become clear how much we all value the Minnesota way of life. Our rich tradition of excellence in education, healthy living and a robust job market must be some of the benchmarks of our next state budget. In order to achieve this, every option must be on the table. My colleagues in the House are committed to fairness and balance, and to being completely honest with Minnesotans about the tough choices that must be made. It is anticipated the House will provide its budget target numbers to the various finance committees within the next two weeks, and we expect to see the Governor’s revised budget in that timeframe, as well. Through hard work and shared sacrifice, Minnesota will recover from this shortfall. I am confident that by rolling up our sleeves and working together toward a common goal, we can put together a realistic budget that reflects Minnesota's priorities. Thank you for giving me the privilege to serve you in St. Paul. As always, please don’t hesitate to share your views on issues that are of concern to you.
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