< Lifting secrecy | Main | Satiating the armadillo paparazzi >

The deficit

Posted at 9:59 AM on March 3, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Highlights of the budget forecast, from Tom Stinson, the state economist: Here's the entire budget forecast.

The budget deficit over the next two years will be $4.57 billion. It's lower than anticipated because of the stimulus. It would have been $6.5 billion. There will be a $236 million surplus in the current 2008-09 budget because of the stimulus package.

Another 70,000 jobs are going to be lost in Minnesota. 15,000 in construction, 30,000 in durable manufacturing. 15,000 in professional services. Only in health care will there be growth. "It could be worse," says Stinson. He expects an unemployment rate of about 9.5%. The total number of lost jobs during the recession should be about 120,000.

Why are so many jobs being lost when the state has been approving record bonding bills. "It takes awhile for jobs to materialize under bonding bills," according to Stinson. "We've had an enormous depression in the housing construction industry... it's an enormous turnaround. You just can't overcome that overnight."

The president's stimulus package will not turn the economy around.

This is a consumer-led economy. "We have to see an increase in consumer spending." It's 70 percent of the U.S. economy and "there's no way the U.S. economy is going to grow until the consumer spends. Some of that reduced spending is because people are trying to rebuild their savings and retirement plans.

A sign of a turnaround would be a drop in the number of jobs lost nationwide. If the number of jobs lost nationwide is below 400,000 when they're announced on Friday, that would "perversely be good news," Stinson said.

The economy will start to grow in 2010-2011. There's a 20 percent probability it won't.

The jobs picture will brighten in the first quarter of 2010. It won't be triggered by just one area.

The stimulus dollars may be hiding the long-term problem, but they're helping in the short term.

There are signs that the credit market is improving.

Because of stimulus money, the governor's proposal to cut adults with children from MinnesotaCare is now off the table.

I saw three Minnesota Public Radio reporters at the news conference. Expect a plethora of coverage on tonight's All Things Considered broadcast.

Comments (2)

If this were happening in a company or organization there would be an immediate look to reorganize and become more efficient. All the government and school will ever say is we need to cut or we need more money.

Now is the time for the government to look at itself and find ways to become more efficient at all levels including cities, townships, counties and states. Same with schools.

The issue comes down to the fact, that jobs will be lost if more efficiencies are found. Who wants to cut their job. If they dropped down to 10 counties that is 77 less Sheriff positions (which could mean more police on the road). In schools it would mean fewer Superintendents and other admin staff (which might mean more classroom teachers).

A perfect example of this is several years ago the University was left with the same budget for the extension service and it had to change. With an more complex farm environment and other areas it serviced it needed more specialists and less generalists (an extension agent in each county). It created about 15 regions around the State and it provides much better service for the same price.

Posted by bigalmn | March 3, 2009 10:53 AM

Running state government is fundamentally different from running a business. It is different from running a department at the University. And it is different from a family figuring out its budget at the kitchen table.

We can certainly look for and find efficiencies, but only if we recognize how very, very complex state government is.

Posted by mplsmcmc | March 3, 2009 1:12 PM