MN Projects $1.1B Budget Deficit for 2014-2015
Minnesota will face a $1.1 billion deficit in the 2014-2015 biennium, according to a budget forecast released Wednesday by the state’s Management and Budget office.
Governor Mark Dayton and state lawmakers will use the projections to craft a two-year state budget when the Legislature convenes on January 8. Dayton is expected to introduce his budget plan by January 22.
According to a Pioneer Press report, Governor Mark Dayton said at a Capitol news conference that he’s “absolutely committed” to balancing taxes and spending in the next two-year budget.
“We’re done with the gimmicks; we’re done with the games,” he said, and he pledged to make the tough, unpopular tax and spending decisions needed to erase the projected deficit, the Pioneer Press reported.
The twice-annual economic forecast takes into account an array of indicators, including local economy, the national economy, and even the financial instability in Europe, according to a Star Tribune report.
But the current budget forecast is more uncertain than usual because of the ongoing “fiscal cliff “debate among Congressional leaders, which economists say could plunge Minnesota and the nation into another recession. The fiscal cliff refers to a set of federal spending cuts and income tax hikes set to take effect on January 1 to reduce federal debt.
“The economy is a little weaker than we thought it would be last February,” State Economist Tom Stinson told the Star Tribune. “Not a lot weaker, but a little weaker.”
And if President Barack Obama and Congressional leaders fail to resolve differences on how to avoid going over the cliff, the array of tax hikes and deep spending reductions will slow down an already sluggish economic recovery, he said.
A remaining 2013 budget surplus would reportedly allow Minnesota to repay $1.3 billion that it borrowed from public schools, but the state would still owe the schools more than $1 billion, and the predicted deficit means there is no immediate plan to eliminate the remaining debt.
Meanwhile, the Duluth News Tribune reported that deficits have been common in Minnesota for much of the last decade, and especially after the recession hit in 2008. Former Governor Tim Pawlenty and lawmakers reportedly faced a $5.27 billion deficit in December 2008, and two years later, incoming Governor Dayton faced a $6.2 billion deficit when he took office.