State finance officials say they won't need to take out short-term loans to pay the bills this spring, but borrowing could be necessary in the next fiscal year.
They told members of a House-Senate panel Monday that Minnesota's cash flow picture has improved due to better than expected tax collections and delayed corporate tax refunds. Payments to school districts and the University of Minnesota were also delayed.
But the financial picture starts to tighten again after July 1. Management and Budget Commissioner Tom Hanson said he's like to avoid taking out a private market loan.
"You don't just get money for free," Hanson said. "You pay interest and that takes money away from other programs. It also could potentially mean we get downgraded by the rating agencies, which then means we pay more for our bonds when we go out into the markets."
House Finance Committee Chairman Lyndon Carlson says the state will limp through the current fiscal year, but he said projections show problems returning next year.
"The new governor and the new legislature will have huge fiscal problems to deal with, just on the cash flow alone," Carlson said.
The state hasn't resorted to short-term borrowing since 1984.