The final state budget forecast of the Pawlenty administration was delivered yesterday, and though the news was grim, it was not unexpected.

While there is currently a ‪$399 million surplus for the balance of current fiscal years (FY) 2010-2011, a $6.2 billion shortfall is predicted for FY 2012-2013. These numbers incorporate paying back the K-12 education payment shift that was part of the FY 2010-2011 budget solution and an expectation that the state will enroll in an early expansion of the medical assistance (MA) program, which will cost $384 million.

The state's revenues for FY 2012-2013 will total $32 billion, with spending projected at $38.5 billion. Looking out even further, continued structural budget problems will result in approximately a $3 billion deficit in FY 2014-2015.

State economist Tom Stinson told officials that job creation is the best tool available to begin stabilizing the economic outlook.

New Speaker of the House Kurt Zellers (R-Maple Grove) and Senate Majority Leader Amy Koch (R-Buffalo) responded to the news by reiterating that the state needs to live within its means and that asking taxpayers for more money is not an option, especially when the forecast shows a 5% growth in revenue during the next budget cycle, which is more growth than most Minnesota households are expecting.

The legislative leaders did not offer any specific proposals or ideas, as they are still waiting for a forthcoming budget proposal from the next governor and the February forecast. However, they did warn against opting into early MA, as it adds to the state's budget pressures and "buys into a reliance on Washington that just isn't working for Minnesota."

In their response, House Minority Leader Paul Thissen (DFL-Minneapolis) and Senate Minority Leader Tom Bakk (DFL-Cook) pointed to the anticipated budget deficit as outgoing Governor Tim Pawlenty's legacy, by way of his using one-time money, accounting shifts and the state's budget reserves to reconcile previous deficits. Coincidentally, Pawlenty used the budget news to tout his fiscal credentials by releasing a press release that "Pawlenty Ends Term with Budget Surplus." He also blasted the projected deficit as "largely fictional," since it is based on spending "assumptions."

Click here for more information about yesterday's budget announcement. .