Minnesota Budget Forecast Sucks

Saint Paul, Minnesota

March 3, 2009

By Marty Owings

Yep, its official, our State budget really, really sucks. How bad does it suck? State Economist Dr. Tom Stinson characterized it as "the worst economic conditions since World War II". In a rare moment at the Capitol everyone seemed to agree that Minnesota is facing a deep and likely worsening economy that will probably be longer than anyone anticipated.

While the federal stimulus money will help lower the deficit from a projected $6.8 billion to around $4.7 billion, Dr. Stinson said that tax receipts would continue to decline, prompting some to speculate that the forecast may need to be revised yet again to reflect worsening conditions.

The Governor responded to questions about tax increases by saying that Minnesota must avoid raising taxes if the state is to remain competitive. He added that if the DFL controlled Legislature pushed for higher taxes that it would "cause a collision".

For their part, the DFL leadership say that some of the things that the Governor is protecting in the budget must be on the table, such as K12 education and the rainy day fund. House Speaker Margaret Anderson-Kelliher stressed the difficult situation Minnesota if facing by saying that "The news that the number of unemployed Minnesotans could fill up the Metrodome and we're on track to fill up the Metrodome once again this year with unemployed Minnesotans is not a good piece of news today."

When it was suggested that the situation was bad enough to transcend politics and partisanship, both the DFL and GOP leadership pledged their willingness to work together....stay tuned for that.

Here is video of the Press Conference highlights from today.

Minnesota Republicans Announce Pay Cut Proposal

Saint Paul, Minnesota (RFN)
by Marty Owings

Calling for State Government to get their own house in order amid an economic crisis, Senator Geoff Michel (R-Edina) stated "The legislative branch must be part of the budget solution and before we go through the entire state budget, line by line, we should find savings in our own budget." Minnesota Republican's are responding to a budget deficit that is anticipated to be close to $7 billion.

Republican Dan Severson (Sauk Rapids) said "If we're not willing to put ourselves and our salaries up for debate, then we won't have a lot of credibility among the people we hear from during these meetings." Minnesota law establishes a 16 member Compensation Council to provide salary recommendations for the Governor, Lieutenant Governor, Sectretary of State, State Auditor, Attorney General and legislators. The Legislature can, if they wish, adopt what the Council recommends, modify recommendations or establish their own pay.

In comparison to other States, Minnesota ranks 16th, paying its Legislators an annual salary of $31,140. California Legislators are paid the most at $113,000 a year. At the low end, South Dakota pays just $6,000. The Republican proposal would reduce pay accross the board by 5%, saving the state roughly $676,441.20 each biennium.

Critics say this looks like its a mostly symbolic gesture since reducing the budget deficit by $670K when it is currently estimated to be north of $7 billion dollars amounts to a drop in the bucket. Furthermore, it would reduce pay by only about $29.96 a week for Legislators. Others say that Law Makers should be spending their time looking at ways to save more critical Government services instead of proposing largely symbolic measures.

The proposal will likely resonate with Minnesotan's who've been forced to tighten their own belts and who are fearful about their jobs and the economy in general. No doubt this will play well on talk radio, its likely to gain any serious support in the DFL controlled Legislature, Lawmakers are struggling with how to reduce the budget in more meaningful ways and still be able to preserve essential services. Sen. Linda Berglin who chairs the Health & Human Services Budget Committee stated flatly "some of the areas he's held harmless are going to have to be on the table." refering to Gov. Pawlenty's budget proposal cuts of $370 million dollars.

In the end, Minnesotan's are not going to be greatly interested in proposals that make good soundbites, but instead solutions to the massive shortfall facing the state and more importantly, how that will impact them directly.

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