After the announcement last week that the state is officially in a recession, State Economist Tom Stinson predicted that the $373 million deficit is likely to grow before the next forecast is released on February 28. Using estimates from the housing market and job growth, Stinson said the state’s projections were “less optimistic in its January forecast than its November forecast.” Though he declined to provide a number, DFL leaders have speculated that the February forecast could reveal a deficit approaching $700 million while other officials have predicted numbers as high as $1 billion.
Assistant Majority Leader Tarryl Clark (DFL-St. Cloud) said the Senate would consider a number of proposals including tax breaks, economic development initiatives and the use of state bonds to help accelerate construction jobs, which have plummeted in recent years. Despite federal interest rate cuts, Stinson reiterated that there isn’t much a state can do to improve the economy other than an immediate flow of revenue into the state, since bonding projects don’t spend much the first year.
With January income tax figures and final holiday-spending revenue yet to be released, Stinson stated the February forecast could still yield unexpected results. Legislators and lobbyists will be watching the forecast closely and with budget cuts reminiscent of 2003 looming, the tone and priorities of the session are likely to change.
For more information on Stinson’s predications, go to http://www.startribune.com/local/14856826.html