MN2020: JEFF VAN WYCHEN STATEMENT ON BUDGET FORECAST

Excluding one-time federal recovery dollars, the state’s revenue situation went from bad to worse today. The state is projecting a deficit for the upcoming FY 2010-11 biennium of a staggering $6.6 billion (approximately), up from the $5.5 billion previously projected. This deficit includes the impact of inflation on state revenues and expenditures.

The February forecast provides even further proof that Minnesota has a revenue problem. Minnesotans should understand that the enormous state budget deficit is not primarily the result of growth in state spending. From the FY 2002-03 biennium to the FY 2010-11 biennium, real (i.e., inflation adjusted) per capita state general fund current resources are projected to fall by 16.3% percent. (Excluding one-time federal recovery dollars)

With a huge deficit still projected for FY 2010-11, state policymakers must consider spending reductions. While federal recovery dollars are a big help, the deficit is primarily the result of a dramatic decline in state revenue. General state tax increases must also be on the table.