By state Rep. Dean Urdahl
A new state budget forecast was issued recently and here’s the crux: We still have some long-term adjustments to make, but the state’s bottom line did not materially worsen.
We would have had a $228 million deficit for the fiscal year ending June 30, but $464 million in federal stimulus money offsets the negative balance and leaves the state with a $236 million surplus.
But we do face a $4.6 billion deficit for the 2010-11 fiscal biennium. We would be looking at a $6.4 billion shortfall if not for a total of $1.8 billion in federal stimulus money.
Some people had feared the new forecast would show a deficit in the $6-7 billion range, making the budget plan Gov. Pawlenty issued in January obsolete. The fact we were able to fill in part of the budget hole means his proposal still is relevant in eliminating the shortfall.
Pawlenty’s initial proposal called for a 2.2-percent reduction in state spending over the next biennium. A mix of spending adjustments, no tax increases, and tax incentives for businesses to create new jobs, also are part of Pawlenty’s blueprint.
State revenues declined more than what was forecast in November, but at least Minnesota’s bottom line has not changed substantially from what was reported then. The federal stimulus money, along with the use of our state’s budget reserve and unallotment, more than offset the additional deficit we incurred.
We should keep in mind the one-time federal stimulus aid may help in the upcoming biennium, but it only reduces short-term budgetary pressures. Projected revenues in the 2012-13 fiscal years are expected to be $5.1 billion less than projected expenditures (before adjusting for inflation).
The official numbers issued today may be encouraging, but the reality is we have a roughly $1 billion deeper deficit problem to solve than we did in January. Some experts say the economy should begin rebounding by early fall and job growth could resume in early 2010. The federal money could help bridge us to that point, but it is one-time money and it does not help us balance our state budget beyond 2010.
Now it is up to the Legislature to present a budget plan of its own. Some legislators were waiting to respond to Pawlenty’s proposal until this new budget forecast was issued. We are heading into the second half of the current legislative session and we cannot let time become a negative factor in such an important matter.
Dean Urdahl represents District 18B in the Minnesota House of Representatives. The district includes most of Meeker County and a portion of Wright County. This is Urdahl’s fourth term in the Legislature after being elected in 2002, 2004, 2006 and 2008.