State economic forecast to be issued Feb. 28
Sarah Lemagie, Session Daily, January 14, 2013 – State officials will issue the economic forecast that guides the Legislature’s budget-building for the next biennium on Feb. 28.
In the meantime, legislators will also pay close attention to the budget recommendations that Gov. Mark Dayton must present by Jan. 22.
The state’s November economic forecast predicted a $1.1 billion shortfall for the next two-year budget cycle. State Economist Tom Stinson and Jim Schowalter, commissioner of Minnesota Management & Budget, reviewed the state’s economic outlook at the first meeting of the House Ways and Means Committee.
Minnesota’s fiscal position has improved since late 2010, when lawmakers were staring down a projected $6 billion budget shortfall, Schowalter said after the hearing. Even so, a key issue this session will be “not pretending that we’re out of it,” he said. “We still have work to do.”
Lawmakers balanced the current budget largely with one-time fixes such as borrowing from Minnesota schools. The state has since been able to rebuild its reserves and repay some of that money, but even with an upturn in the economy, “We haven’t grown our way out of the problem,” Schowalter said.
“The state, even after a good November forecast, is facing a significant budget challenge in the 2014-15 biennium,” he said. “The economic environment has been improving, but there’s still unusual risks due to federal fiscal policy, specifically the fiscal cliff” – a crisis which Congress resolved only partially at the end of December – “and now the debt ceiling crisis.”
Decisions made at the federal level this year could lead to market changes with a significant impact on Minnesota’s economy, “and that’s what we still don’t know how to model and have no way to predict,” Schowalter said. Some of those questions, he said, are likely to remain unanswered when the February forecast is released.