Minnesota is facing a projected $2.4 billion deficit, as the coronavirus pandemic continues to upend the economy, state budget officials announced Tuesday.
The grim forecast, which represents a $4 billion swing from the projected surplus at the start of the year, will shape the final two weeks of the legislative session and the state budget for years to come.
Here's a look at what top elected officials and political groups are saying about the budget outlook and what the state should do in the weeks and months ahead.
Gov. Tim Walz said the "budget outlook confirms what we suspected: COVID-19 will badly damage Minnesota’s economy.”
“As I said during my State of the State address, there is a long winter ahead. COVID-19 is upending life as we know it—and our economy will not be spared. This will mean shared sacrifice among all of us. Hard decisions will be made. But thanks to smart budgeting, Minnesota is in a much better position than other states to weather the storm. We must not undercut what got us there: Investing in our children. Expanding access to health care. Putting Minnesotans first.”
Senate Majority Leader Paul Gazelka, R-East Gull Lake, urged fiscal restraint and sacrifices, including a modest bonding bill, salary freezes and a renegotiating of state worker contracts, as he called on the state to "open the economy to revenues that fund essential government services."
“The state is going to have less money next year. About $4 billion less. That falls on the shoulders of the legislature to manage. We are doing everything we can to limit the negative financial impact of COVID, but it’s clear a holding pattern is not enough...We need to say, "no" to any new spending increases that won't be reimbursed by the federal COVID relief funds or help us reopen the economy....At the end of the day, we need to be able to look into the eyes of the small business owner and the laid-off worker and tell them state government is making sacrifices too. Empathy is not enough. Actions speak louder than words.”
House Speaker Melissa Hortman, DFL-Brooklyn Park, said she is "relieved that the size of the projected deficit was not larger" and said new federal coronavirus response funding will allow "us to take measures to provide economic security to Minnesotans to help them get through the COVID-19 downturn."
“Thanks to prudent financial management of the state's resources by the executive and legislative branches over the past decade, Minnesota has enough resources in the budget reserve and the cash flow accounts to weather the downturn... Investments are needed to make Minnesotans secure in their housing, help small businesses, facilitate distance learning and telemedicine, and to ensure we have the workforce we need to provide care for the elderly and people with disabilities. The federal assistance allows us to make these needed investments, while our state's savings will cover our expected dip in revenue.”
House Majority Leader Ryan Winkler, DFL-Golden Valley, said "Minnesota has the resources we need to address this crisis; we just need the will to act."
“We must stay the course to reduce the impact of COVID-19, save lives, and help Minnesotans get through the storm. Minnesotans need investments in the things that will help them make it through this crisis and thrive after it, including quality health care, economic security, a good education, and safe and healthy communities.”
House Minority Leader Kurt Daudt, R-Crown, called for budget cuts to close the shortfall:
"Today’s budget update shows that our state is seeing the same financial struggles that families and businesses are facing. Democrat Governors in New York and Wisconsin have already come forward with billions in budget reductions to react to the COVID crisis, and it's time for Gov. Walz to do the same. Families and businesses cannot bear the burden of this crisis alone: government must share in the sacrifice."
Senate Minority Leader Susan Kent, DFL-Woodbury, said "the updated budget projection shows we have pivotal decisions to make in the coming weeks."
"The legislature holds the power of the purse and it is our responsibility to be careful stewards of taxpayer dollars. It is also absolutely crucial we don’t leave anyone behind. Our budget reserves are strong because we have prepared for this through careful and thoughtful management of our state revenues. Now is the time to join together to help our neighbors by passing forward-looking legislation in order to ensure every one of us can care for our families, earn a fair return for our work, and protect the people who are protecting us during this public health emergency.”
Rep. Steve Drazkowski, leader of the House New Republican Caucus, blamed Walz, saying he "unwisely took a sledgehammer to Minnesota’s economy, and we are all suffering for that decision."
“Governor Walz has created a budget problem, and he is going to ask Minnesotans for a bailout. The governor will use this budget shortfall as an excuse to increase taxes. However, we cannot allow state government to double-dip into the pockets of hard-working Minnesotans. The new budget projection demonstrates that Minnesota needs to limit government, cut budgets, and not take more money from Minnesotans who are already struggling due to Governor Walz’s decision to shut down our economy.”
AFSCME Council 5 Executive Director Julie Bleyhl, whose union represents state and county workers, said the state "will not cut our way out of this global pandemic."
"Through several years of sound budgeting principles under Governors Dayton and Walz, Minnesota has built up a strong 'rainy day' fund to get us through difficult times like these. Working together and investing in public services at this time of great need will get us through the many unknowns caused by COVID-19. Investing in such services has a positive return on investment, saves and transforms lives, and ensures that Minnesota remains one of the best run states in the nation."
Coalition of Greater Minnesota Cities President and Willmar City Council Member Audrey Nelsen stressed the importance of keeping Local Government Aid (LGA) payments flowing:
“Today’s budget projection highlights the challenges ahead for our cities and the state. As we continue to deal the immediate and long-term effects of the pandemic, there is deep anxiety among city officials about the potential for lost revenue from reduced property tax collections, fees and local taxes. With city budgets stretched thin, it is vital that the state makes its regularly scheduled LGA payments in July and December. "
Center of the American Experiment economist John Phelan said "politicians should not use the budget deficit as an excuse to increase taxes, especially during an employment crisis that rivals the Great Depression"
"State spending has increased so drastically in recent years that budget cuts are overdue. If we spent the rainy day fund and then balanced the budget by decreasing spending, per capita spending would fall by only $6 per person. That budget correction is hardly draconian.”
Minnesota Jobs Coalition Executive Director John Rouleau called for a freeze in state employee salaries and raises:
"Governor Walz has repeatedly asked to sacrifice, to make hard choices, and to be in this together. Minnesotans have complied, joined in this sacrifice and made those hard choices... At a time when over half a million Minnesotans have filed for unemployment, workers have had their hours and pay cut and Minnesota spirals toward a budget deficit, state government must tighten its belt."
A coalition that includes TakeAction Minnesota, SEIU MN State Council, ISAIAH, the Minnesota Nurses Association, OutFront and other progressive groups called for tax increases for the wealthy, saying "the choices we make now to help us weather this virus can also set a better course for the future of our communities."
“Minnesotans know that we face challenging times, but we, as a state, are up to the challenge.We’ve taken on big fights before, and come out stronger on the other side. It’s time for the richest 1%, the most profitable corporations, and the handful of politicians that support them, to stop fueling our divisions for their own gain. Instead, we need those at the top to do what the rest of us have always done – chip in to pay their fair share so we can build a state that cares for all of us, no exceptions.”
Americans for Prosperity Minnesota State Director Jason Flohrs said the "government will have to do more with less, make tough budget decisions, and live within its means – just like every family and business is forced to do."
"We encourage policymakers to take on these challenges by setting priorities for future spending and bringing people together to find ways to safely reopen the economy. The faster we can empower businesses to innovate and adapt to safely reopen, the faster we can get Minnesotans back to work. With just under two weeks left in the session, lawmakers should identify unnecessary spending and refocus funding on essential and necessary services."
Education Minnesota President Denise Specht said leaders should come "together to rewrite the rules and rebuild our state so everyone, with no exceptions, pays their fair share, earns a fair return for their work and can care for their families and feel good about sending their children to safe and welcoming public schools staffed by professional educators.”
“It has never been more clear that Minnesotans pull through by pulling together, no matter what we look like or where we live. But it’s also becoming clear that the wealthiest 1 percent, and the politicians who support them, see the budget deficits in our future as an opportunity not to step up and pay their fair share, but as a chance to fuel divisions in our society so they can lobby for budget cuts that will harm the people who all Minnesotans have come to depend on during this pandemic, including health care providers, first responders, state employees and educators of all kinds."
AFL-CIO President Bill McCarthy called on the state to invest in jobs and "critical infrastructure to put tens of thousands of Minnesotans back to work" and ask "the wealthy and big business to pay their fair share."
“Thanks to wise fiscal management and past investments, this deficit is not as bad as it could have been. However, corporate special interests and their allies in the Legislature will likely use this crisis as an opportunity to enact painful cuts and slash taxes for the richest 1%. Minnesotans know better. We know that cuts to the vital services that Minnesotans depend on – especially right now – will only make this crisis worse. We know that it’s time for all of us to do our part and pull together as One Minnesota.”