Minnesota State Deficit Grows; Governor Pawlenty Says Budget Must Be Balanced Without Raising Taxes

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February 28, 2008 -- Saint Paul – With the state now facing a forecast budget deficit of $935 million, Minnesota Governor Tim Pawlenty today said, “Raising taxes is not the answer to balancing our budget. Like families and businesses are doing in this tough economy, government needs to tighten its belt and live within its means. I will not allow this session to turn into a parade of DFL tax hikes.”

The forecast shows a projected $935 million shortfall for the current two-year budget period, up from a $373 million deficit that was projected in November. The forecast deficit for the following two-year budget, FY 2010-11, is $1.086 billion.

Governor Pawlenty said his budget balancing plan will be released soon and will use spending cuts and a portion of the budget reserves and other funds to solve the deficit. He ruled out tax increases. The Governor also said he would not propose any reductions to K-12 education funding.

Revenue growth for the current budget as compared to the 2006-07 budget is 0.6%, a $201 million increase. For the same period, spending growth is 10.3%, a $3.2 billion increase.

Governor Pawlenty reiterated his desire outlined in this year’s State of the State Address to reduce taxes and regulations that discourage job growth, income generation, investment, entrepreneurial activity, research, and exports. He said he would be announcing further details about the creation of the 21st Century Tax Reform Commission soon.

Source: Minnesota Governor