Letter: Business as usual is not the answerThe deficit number is $1.2 billion, and it marks the third year in a row that Minnesota will face a budget shortfall.
By: Dist. 22A Rep. Doug Magnus, R-Slayton, Worthington Daily Globe
The deficit number is $1.2 billion, and it marks the third year in a row that Minnesota will face a budget shortfall.
The forecast numbers are disappointing, but they come as no surprise since the nation and much of the world are struggling with poor economic conditions. Tax collection numbers continue to fall below expectations.
Minnesota wages and employment have fallen more than previously forecast, leading to an $827 million decline in income tax projections, as well as lower than projected revenues in sales and other state taxes.
It’s apparent that state government spending can no longer follow the business-as-usual path. For many years state spending has been on an automatic increase. This cannot continue. Our state and national economies are not growing and in many areas they continue to contract.
For further proof of our poor economic climate, one may point to recent developments in Washington. The Federal Reserve is pumping more than $1 trillion into the housing market in an effort to drive down interest rates. The federal government is also sending out huge amounts of money through assorted programs as it attempts to stimulate the economy. To me, it seems like both of these efforts are driving down the value of the dollar, meaning we’re buying less with what we earn.
Minnesota’s financial problems won’t end with this $1.2 billion shortfall, as economists project our state to face a $5.4 billion budget deficit during the next budget cycle unless reforms are made. With no money in the rainy day fund, raising taxes or cutting spending are basically the only options left to solve this economic problem. While these budget problems are severe, they can be resolved.
It’s going to take leadership from the Legislature, the Administration, and also the business community. Business as usual or putting off the problem until next year will not work, as Minnesota spends millions each day on state government programs. The time for action is now.