Indications are that when the state’s new February Forecast comes out (on March 2, we’re told), there won’t be too much of a change in the state’s projected budget shortfall, currently at $1.2 billion for the FY 2010-11 budget cycle.
This is a topic I’ve blogged on before, but in a recent appearance on MPR’s Midday program, State Economist Tom Stinson confirmed that the state’s fiscal situation hasn’t altered much since the November Forecast. As reported in the Polinaut blog:
He expected the outlook to vary by plus or minus a couple hundred million dollars, which means lawmakers will still have to confront a serious financial problem. “Anybody that thinks we’re going to generate $1.2 billion in new revenue and solve the problem, they’re dreaming,” he said. “But anybody who’s having nightmares we’re going to give them $2.5 billion rather than $1.2 billion problem, they’re probably going to be relieved that we’re not going to be there.”
More confirmation comes from the state’s January revenue collections. As reported by WCCO and others, revenues this fiscal year are currently $45 million above the forecast. Not a huge amount, but another sign that things are tracking pretty close to projections. So we’re not expecting a big surprise in the February Forecast.
While the fact that things aren’t likely to get too much worse in the forecast is good news, there is one big disappointment. Federal aid to the states contained in the federal stimulus bill, particularly in the area of health care and education, was an important part of last year’s deficit solution. And it’s clear that states, including Minnesota, will continue to face large budget shortfalls long after those stimulus dollars end in December 2010. Because of that, federal policymakers have been considering a six-month extension in federal aid, and we had hoped that legislation would have moved through Congress in time to be incorporated into the February Forecast. That hasn’t happened, and Congress does need to move more swiftly on this issue, or states will not be able to take those dollars into account as they set their budgets this year, resulting in more painful cuts to services.
-Nan Madden
