Minnesota legislators are bracing for another projected budget deficit as the state's wobbly economic recovery fails to outpace the political uncertainty in Washington.
State budget officials will release a new economic forecast Thursday, which will firm up budget numbers as legislators craft their two-year budget plans. In November, state officials projected a $1.1 billion deficit over the next two years, prompting DFL Gov. Mark Dayton to offer a budget proposal that included a menu of tax increases and new spending.
The new number, which will be at the center of the budget fight for the remainder of the legislative session, remains a closely held secret until Thursday's release.
Minnesota Management and Budget Commissioner Jim Schowalter said many economic and budget indicators are largely unchanged from the last economic snapshot.
"It's unlikely you will see a big change in this forecast," he said.
The state's slow economic recovery remains stronger than many states, but bruising and destabilizing political fights in Washington over the so-called fiscal cliff, automatic budget reductions and the debt ceiling continue to weigh on the economic outlook.
"I see an economy that is slowly growing, that's gotten some of the questions answered by Washington, but not all of them," Schowalter said.
The federal government has locked in its contribution for medical assistance, which Schowalter said helps tame some of the uncertainty etched into the last forecast. The state's health care costs consume a giant share of the state budget and are largely to blame for the continued increase in state spending.
