Minnesota faces $1.1B budget shortfall; union calls for tax increase – TwinCities.com

Minnesota state government faces a $1.1 billion budget shortfall during the next two years, Minnesota Management & Budget announced Wednesday, Dec. 5.

The projected deficit is the same figure that state financial officials forecast in February.

The agency said the state has enough money in the current budget to pay back $1.3 billion of the $2.4 billion that Gov. Mark Dayton and the Legislature borrowed from schools last year by delaying state aid payments. But there won’t be sufficient funds in the two-year budget period that starts July 1 to continue buying down the school shift.

Finance officials will unveil the complete budget forecast at the Capitol at 11:45 a.m. today.

First to react to the budget numbers, the state’s largest public employee union called for a $6 billion tax increase to erase the red ink and improve state services.

“We need $6 billion to dig ourselves our of the hole and pay for the things Minnesotans care about: brainpower schools, middle-class jobs, safe transportation and property tax relief,” Eliot Seide, director of the 43,000-member AFSCME Council 5, said in a press release.

The state AFL-CIO also quickly advocated a tax increase.

“If we want to continue to have strong schools, a 21st century transportation infrastructure, create family-sustaining jobs and care for those unable to care for themselves, Minnesota will need a significant influx of new tax revenue,” AFL-CIO President Shar Knutson said in a statement.

Republican and Democratic legislators continued their finger-pointing on who is more responsible for the billions of dollars owed schools. In reality, both parties are to blame.

About $1.9 billion in accounting shifts were approved in 2010 when Democrats controlled the Legislature, Republican Gov. Tim Pawlenty was in office and neither side could agree on how to balance past budget shortfalls.

Those school shifts were reinstated and an additional $770 million tacked on yet again in 2011 session — this time with a DFL governor and a Republican-controlled Legislature — as lawmakers struggled to compromise. That brought the total amount owed to $2.7 billion.

Going in to the latest forecast, the debt to school was at about $2.4 billion.

Deficits have been common in Minnesota for much of the last decade. After the U.S. economy plummeted in 2008, deficits here ballooned: former Gov. Tim Pawlenty and lawmakers faced a $5.27 billion deficit in December 2008, and two years later incoming Gov. Dayton and a new Republican majority came into office looking at a $6.2 billion deficit.

via Minnesota faces $1.1B budget shortfall; union calls for tax increase – TwinCities.com.

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