Budget Forecast: The state is facing a fiscal storm, once again, of epic proportions

On February 29th, State Economist Tom Stinson and Minnesota Management and Budget Commissioner Jim Schowalter reported an additional $323 million for our current two-year budget cycle. These added resources stem from better-than-expected general fund revenues for fiscal year 2012-13 in the amount of $93 million and $230 million less in anticipated spending from the previous forecast. Most of the spending reductions are the result of significantly lower than projected enrollees in the early expansion of Medical Assistance (MA) for adults without children.

While the overall economy is improving, and the Republican leadership in the House and Senate has been quick to take credit for solving all of the state’s fiscal issues, the rest of the story needs to be told. No doubt about it, an additional “$323 million surplus” makes for a great forecast headline. To put this in context, let’s try a little weather analogy. “While the afternoon weather forecast says clear and sunny. Come the end of the week; look out! A severe thunderstorm is headed your way!”

That is what our state is facing from a fiscal standpoint; a storm, once again, of epic proportions. First and foremost, how much of that “$323 million surplus” actually exists? Give up? Zero. Of the $323 million, $5 million has been added to our depleted budget reserve account (one of the accounts Governor Pawlenty had to spend down to zero in-order to unallot). Next, the remaining $318 million must be used to start repaying the funds that were taken from our schoolchildren. In order to balance the budget last year and end the government shutdown, instead of asking individuals earning more than one million dollars per year to pay a penny more in taxes, the Republicans in the legislature voted to withhold more than $2.7 billion from our schools. By law any surplus most go towards making our kids whole.

Going forward, our state faces a projected $1.1 billion deficit for the next biennium. At first glance, that may not sound half bad. However, when the remaining $2.4 billion owed to our schools is factored in, and the $1.5 billion cost of both interest and principle to repay the one-time money from the tobacco bonds is accounted for, our state is right back where it started. With a $5 billion deficit. The republicans have nothing to take credit for. No changes have been made. No structural reforms. Just more smoke and mirrors.

Real fiscal stability is going to require tough choices. It is going to require both cuts and revenue. I’ve voted for both in the past and continue to support a balanced approach going forward.

Avatar of State Rep. Andrew Falk (District 17A)

About State Rep. Andrew Falk (District 17A)

State Representative Andrew Falk (DFL - Murdock) represents Minnesota House District 17A which comprises all of Chippewa, Swift, and portions of Renville and Kandiyohi counties. Rep. Andrew Falk can be reached at: Phone: 651-296-4228 E-mail: rep.andrew.falk@house.mn 439 State Office Building 100 Rev. Dr. Martin Luther King Jr. Blvd. Saint Paul, Minnesota 55155
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One Response to Budget Forecast: The state is facing a fiscal storm, once again, of epic proportions

  1. It seems like the budget for any city and every state needs a good ‘looking at’. No matter what I read it seems like every state has problems with budget, but I am very hopeful and respectful of the people in power that look over all of us! :)

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