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2009 November Budget Forecast
By admin | December 8, 2009
On December 2, MMB Commissioner Tom Hanson and State Economist Tom Stinson released the 2009 November Economic Forecast. The state’s deficit for the 2010-2011 biennium is projected to be $1.203 billion. The largest component (approximately 70%) of the deficit is a dramatic decrease in expected income tax receipts. Projected revenues for next biennium are down by $1.156 billion, about 3.7% less than expected after the 2009 Legislative Session (including Governor Pawlenty’s unallotment and executive actions).
The recession’s impact on employment and wages was worse than previously anticipated. The projected employment decline is a full 1 percentage point more than the forecast in February. Between the first quarter of 2008 and the first quarter of 2010, employment is expected to fall by 150,000 jobs (the equivalent of over a decade’s worth of job creation).
Other sources of revenue fell by small amounts. Corporate taxes and motor vehicle sales taxes were increased by $54 million and $7 million, respectively.
The long-term budget forecast is projected to be a $5.426 billion shortfall for FY 2012-13. This deficit is larger than the previous end-of-session estimate of $4.431 billion. The planning estimates include complete repayment of K-12 school aids, and no repayment of the K-12 property tax recognition shift. These projections also do not include reinstating the funding for General Assistance Medical Care (GAMC). Furthermore, the forecast does not factor in inflation.
Supporting documents for the 2009 November Forecast are available online at http://www.mmb.state.mn.us/forecast. A summary of the forecast is attached for your use and review.
Governor Pawlenty held a press conference about the November forecast. Overall, he directed state agencies to place a hold on spending, asked legislators to begin holding hearings to craft budget solutions, and warned that a portion of the December LGA payments may have to be unalloted.
Governor Pawlenty’s press release is online at http://www.governor.state.mn.us/mediacenter/pressreleases/PROD009742.html
Click here to read the full report.
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