The State of Minnesota February budget forecast released Thursday shows a projected budget deficit of $627 million for fiscal years 2014-15. This is an improvement of $463 million from the November budget forecast that showed a projected deficit of $1.1 billion.
District 1 State Sen. LeRoy Stumpf said the new forecast is a positive sign that Minnesota’s economy is experiencing a fragile recovery. The state seems to be heading in the right direction, he said. However, Stumpf added, the improved forecast number does not change the fact that at $627 million, Minnesota still faces a significant budget deficit.
Most of the savings come from improved job and economic growth. "In fact, we will be back to pre-recession levels in job creation by the end of this year," Stumpf said. "The rest of the country will get there nine months later."
Stumpf said it’s vitally important the legislature make responsible budget decisions to ensure this positive economic progress. "It is widely believed that a careful balance of spending cuts, responsible new revenue and targeted government reforms is the sensible combination needed to solve the deficit and support continued economic recovery," he explained, adding that State Economist Tom Stinson, who has served under Republican and Democrat administrations, confirmed that a balanced approach – one that uses some spending cuts and new revenue is the best budget solution for Minnesota.
Since Minnesota began running budget deficits in 2002, Stumpf said the solutions to those deficits have relied heavily on spending reductions and temporary solutions, but very little on tax increases. "In fact, during this period spending cuts have been used at nearly five times the rate as tax increases," he said.
After more than a decade of budget cuts, Stumpf said a fair and stable budget must include both cuts and new revenue to erase our budget deficit while allowing us to make key investments in Minnesotans’ shared priorities such as schools, colleges and universities, nursing homes, our rural transportation system, and property tax relief for farms, businesses and homeowners.
"In the coming weeks it is vitally important that legislators roll up their sleeves and compromise on a fair and honest budget solution to end the continual budget deficits and set up Minnesota on the road to fiscal stability," Stumpf said.