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Opinion: Budget gap illustrates need for job creation and economic stimulus

December 5, 2008 by Howie · Leave a Comment 

Budget gap illustrates need for job creation and economic stimulus

The big news this week is that the State of Minnesota is facing a projected $4.8 billion shortfall for 2010-11, and an additional $426 million for the current budget year. Legislators and the governor face a daunting task to fill the budget gap as the legislative session begins next month, according to state Sen. Yvonne Prettner Solon (right) of Duluth.

Job creation, Sen. Prettner Solon said, will help Minnesota get on the road to recovery.

“We need to get Minnesotans back to work,” she said. “We’ll need to look for long-term solutions, make tough choices, and to set priorities. But I believe that we can make it through this.”

The budget numbers, called the November Forecast, were released at the Capitol on Thursday morning. The forecast, derived from numerous economic factors and trends, is a snapshot of the state’s fiscal landscape used by the Legislature and governor to help develop the upcoming biennial budget. The governor is expected to provide a list of cuts to solve the $426 million deficit within the next few weeks.

Minnesota’s economic woes follow the national trend, with 41 other states reporting budget shortfalls. In the past, Minnesota has weathered national economic storms better than the rest of the country; however, that’s not the case now.

According to State Economist Tom Stinson, the state can expect to lose 77,000 jobs during this recession, which Stinson said started a year ago. Compare that to job losses of 55,000 in 2001 and 10,000 jobs lost during the 1990-91 recession.

Gov. Pawlenty and other governors met with President-elect Obama earlier in the week to discuss a possible economic stimulus package that may include aid for states facing budget deficits. Pawlenty has reacted cautiously to the plan, despite the fact that Minnesota ranked 46th in terms of receiving federal tax dollars per tax dollar paid, according to the Tax Foundation. Their report shows Minnesota received only 72 cents for every dollar sent to the federal government in 2005; however, neighboring North Dakota ranked 6th and received $1.68 for every dollar they sent in.

“We should be looking to do whatever we can to ensure that our state gets the help it needs to jumpstart our economy. We shouldn’t turn away help at a time when we need it,” Sen. Prettner Solon said. “At the state level, numerous legislative working groups, such as the Green Jobs Task Force, already are meeting to discuss how to create jobs in Minnesota both in the short and long-term. That’s a good start.”

The Legislature will go back into session on Jan. 6, 2009. The governor has indicated he will put forward his budget proposal early in the session for the Legislature to consider.

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