The new revenue forecast released Tuesday appeared to slightly ease state government's immediate budget crisis, keeping state books in the black through the end of fiscal 2009 (on June 30) and reducing the projected 2010-11 deficit to $4.57 billion, from more than $4.8 billion, excluding inflation in expenditures.
But nobody in St. Paul was smiling about the new numbers -- and no Minnesotan should think they signal the turn of an economic corner. To the contrary: Only the one-time infusion of federal money sent by the stimulus bill enacted last month spared Minnesota from a deficit forecast of $6.4 billion -- or, put another way, revenues $3.2 billion lower than state government is spending in the current biennium.
The federal stimulus will save 45,000 jobs that otherwise would have been lost in Minnesota, state economist Tom Stinson said. But even with that boost, 120,000 Minnesotans are expected to experience a job loss before this recession runs its course, he said. Stinson spoke soberly about a state unemployment rate well above 9 percent through 2010.
The forecast added $1.8 billion in federal Medicaid spending to the state's bottom line. But that's not the full impact of the federal stimulus bill on state government. As much as another $817 million in stimulus funds, and the state spending required to qualify for it, will be factored into Gov. Tim Pawlenty's revised budget recommendations, which he said will be sent to the Legislature later this month.
The federal money is more than welcome. But as the governor noted, it has a downside. It serves to temporarily "wallpaper over" a state money problem that will reappear with a vengeance in 2012-13 unless the Legislature and Pawlenty act this year to avert it. Tuesday's forecast says that without action to reset state spending and revenues, the state will be another $6.5 billion in the red in 2012-13. The state Constitution requires that the Legislature and Pawlenty balance the 2010-11 budget this session; their stewardship obligation to this state -- and a new statute, signed into law on Monday -- demands that they close the "out-years" gap as well.
That work must now proceed in earnest. The slow pace of this year's session has been understandable until now, given uncertainty about the economy and about congressional action. Seeking input from government stakeholders and concerned citizens in meetings around the state last month had merit, given the magnitude of the changes that are coming.
But it's even more important that Minnesotans have ample time to analyze competing ideas for balancing the state budget. House Speaker Margaret Anderson Kelliher hinted yesterday that the outlines of a DFL budget proposal might be assembled for release soon. We hope her hint signals a serious intention to produce proposals ahead of the usual timetable.
A mid-April release of the DFL plan might be acceptable under normal circumstances, but this year is anything but. DFLers have gained seats in the Legislature in the last three elections by voicing their belief that a robust state government can improve the quality of life for future Minnesotans. It's time now for them to exhibit courage in their convictions by advancing a budget remedy and allowing it ample review.