State Economic Forecast
According to Elaine Keefe, our MLA/MEMO Library Lobbyist….
“The state economic forecast was released today, and it contained both good news and bad news. The good news is that for the current fiscal year the state is projected to have a $1.33 billion surplus. Under current law that surplus will be used to pay down the education funding shift. The amount the state owes to schools and libraries will be reduced from $2.4 billion to $1.1 billion. The bad news is that the state still faces a $1.1 billion deficit for the next biennium (FY 2014-15). That’s the period that the Legislature will be adopting a budget for in the upcoming legislative session. Forecast documents are posted on the MN Management and Budget (MMB) website at http://www.mmb.state.mn.us/fu-current-fore-nov ” The Forecast at a Glance doc is a short one pager, but if you want specific detail about the School Shift Buyback, take a look at the nitty gritty detail in the 15 pg. Forecast Summary document.
Another helpful general “take” on the MN budget situation arrived in my inbox yesterday through the MN Budget Project’s, Budget News and Tools Newsletter.
“The November Economic Forecast from Minnesota Management and Budget shows Minnesota remains mired in a vicious cycle of budget deficits. The forecast predicts a $1.3 billion positive balance for the current budget cycle, which will go to pay back a portion of the school funding shift. However, there is a $1.1 billion deficit for the FY 2014-15 biennium. When taking the impact of inflation into account, the forecast shows a $2.0 billion deficit in FY 2014-15 and $2.1 billion in FY 2016-17. According to a news release we issued, the continuing budget deficits show that Minnesota needs to move beyond gimmicks and short-term fixes and support the state’s priorities for the long term.
A Minnesota Budget Bites blog post analyzes some of the main issues and concludes:
- Minnesota needs to reform our outdated tax system so that it raises enough revenues to support our needs, and does so fairly;
- The Legislature should act to cover more Minnesotans under Medicaid, qualifying us for more federal funds and allowing more than 140,000 low-income Minnesotans to gain access to affordable health care;
- Congress and the President should end the uncertainty over the federal “fiscal cliff” by taking a balanced and responsible approach to deficit reduction that includes raising revenues and that will support economic growth in the short term and fiscal stability in the long term.
So, I am quietly, carefully optimistic about this forecast (could be worse) and look forward to seeing the Governor’s budget soon. Having said that, it appears the “federal fiscal cliff” is our biggest concern at the moment, and if not settled, could raise our budget deficit to a much higher level. The bottom line according to MMB is: ” If gridlock leads to us falling over the fiscal cliff, the nation would likely sink into a recession in early 2013. And, Minnesota’s budget deficit for FY 2014-15 would increase by $1.7 billion, to a total of $2.8 billion!”