State Economist Tom Stinson and the Commissioner of MN Management & Budget Tom Hanson held a press conference today to tell us that the State’s budget outlook improved slightly since their last forecast in November. In what’s known as the “February forecast,” the state is projected to have a $994 million deficit for the current budget biennium, and a $5.8 billion shortfall for the upcoming biennium budget in 2012-2013.
This revised forecast is a slight improvement from November’s estimated current biennium deficit of $1.2 billion, but it will still be a challenge for the Legislature to find a way to resolve the $994 million deficit during this legislative session. The differences between the last forecast and today’s are a $184 million reduction in projected expenditures, and a $25 million net-increase in revenues. Most of the spending reductions are from slightly lower state expenditures and higher Federal reimbursements for Medicaid spending.
The forecast also takes a look at the future economic outlook, which in the case of the February forecast is about the same as the November forecast. Over the current biennium, real GDP growth is now expected to average 1.8%, which is up slightly from the 1.4% projected in November. On the employment side, there will be a slight increase in employment levels when the 2010 census work begins, but these jobs are only temporary. In a bit of positive news, the forecast predicts that sometime during the 2012-2013 biennium that wages and employment will reach their pre-recession levels. On the budget deficit side, the FY 2012-2013 budget shortfall is $363 million more than projected in November, totaling $5.789 billion. This figure does not factor in general inflation.
So to sum it up: It could have been worse. If you’re interested in the full documentation of today’s announcement, you find the documents online at: http://www.mmb.state.mn.us/fu-2009-nov.
