State economist says budget gap likely to grow
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(AP) - A projected state government budget gap is likely to grow from the $373 million forecast back in November because tax revenues are lagging due to the slumping economy, State Economist Tom Stinson said.
But Stinson cautioned that the state won't be able to make a good budget prediction until it releases its new economic forecast Feb. 28.
"Almost certainly we're going to have less in the forecast than we had in November," he said. "And the question really is, just how much?"
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Speaking Tuesday at an event sponsored by Minnesota Council of Nonprofits, Stinson pointed to slumping housing starts in the fourth quarter of 2007 and other measures indicating the state economy is less healthy than the national economy. Earlier this month, Stinson asserted the state is in a recession.
Stinson said Global Insight, the company the state uses in putting together its projections, was less optimistic in its January outlook than it had been in its November forecast.
Even after the Federal Reserve cut a key interest rate by three-fourths of a percentage point last week to stimulate the economy, Global Insight "reiterated their pessimistic outlook," Stinson said.
Stinson said some hints might emerge after December sales tax revenue, which will reflect holiday spending, and some January income tax figures become available in a few days.
(Copyright 2008 by The Associated Press. All Rights Reserved.)