State economists handed lawmakers some shocking statistics after announcing that Minnesota will face a $1.2 billion budget deficit.
This “Great Recession” is the worst economic downturn Minnesota has faced in more than 60 years. Because of this, Minnesota wages and employment have dropped more than previously forecast.
Minnesota is expected to lose 150,000 jobs between the first quarter of 2008 and the first quarter of 2010. If that forecast holds true, more than a decade of job creation will be lost.
These job losses have been accompanied by record declines in total wages paid to our workers. Minnesota wages and salaries had not declined on an annual basis since state wage data was first reported in 1970. Through mid November, wages were on pace to decline by 5.5 percent.
State income tax revenues are $827 million below the previous projection, while sales taxes are $32 million lower and all other combined taxes are $351 million under projection.
The future looks bleak as well, because if no changes are made, the Fiscal Year 2012-2013 budget deficit will likely exceed more than $5.4 billion.
So in summary, our economy stinks, and it could continue to reek in future years because fewer people have jobs, and many of those who do are bringing home less money.
Sadly, this isn’t breaking news. Minnesota also dealt with a nearly $1 billion budget deficit in 2008, and a $6.4 billion shortfall in 2009.
And how did our Democratic legislative leadership deal with this problem? After discussing tax increases in 2008, they finally accepted the fact that the Governor would not go along with their economy-stifling idea and solved that deficit largely by eliminating the state’s rainy day fund. And in 2009, the Democrats simply gave up after repeated attempts to raise taxes failed and left Governor Pawlenty to balance the budget on his own.
If history repeats itself, we can expect the Democrats to once again pass legislation forcing families and businesses to pay more for state government programs. After all, it’s the only play in their playbook.
To me, tax increases should be a non-starter. Forcing people to pay higher taxes when many families are already dealing with an unemployed family member or lower incomes makes no sense.
This year, our focus must be on developing policy that encourages job creation by Minnesota’s business owners, rather than jobs that come from the annual bonding bill. While that legislation might provide temporary work for some in the construction trade, it does next to nothing for every other area of the job market and simply does not produce sustainable jobs. The private sector does that.
Job creators tell us repeatedly that they cannot create jobs while the threat of federal and state tax increases hang over their heads.
Common sense tells us it’s time to remove the state government impediments to job creation, and allow our businesses to improve Minnesota’s economy. A better business climate means more job opportunities. More jobs mean more people will be employed and pay state taxes, which will fill the state coffers with new revenue and end our economic woes.
Job creation policies that benefit all job sectors will eliminate this recession permanently, and these policies should replace tax increases as the number one priority of our legislative leadership this year.