Minn. budget forecast to be released today; state leaders prepare responses

Dayton and GOP leaders
DFL Gov. Mark Dayton, right, speaks to reporters along with Republicans Kurt Zellers, the House Speaker, left, and Senate Majority Leader Amy Koch at the State Capitol in St. Paul, Minn., on Thursday July 14, 2011, after they reached an agreement on a new two-year state budget that will end the state government shutdown within a few days. A state budget forecast will be released Dec. 1, 2011, that could show Minnesota facing a deficit again.
MPR Photo/Jeffrey Thompson

Finance officials release the latest state budget forecast Thursday — the first look at the budget since Gov. Mark Dayton and the GOP-controlled Legislature enacted a budget plan that delayed school aid and borrowed against future tobacco payments to erase a $5 billion deficit.

That agreement ended a 20-day state government shutdown that highlighted the political disagreements between Dayton and Republican legislators. Both sides are retooling their talking points for the 2012 legislative session.

State Economist Tom Stinson said in early October that he thought today's forecast would show Minnesota facing a deficit — the only question for the governor and lawmakers is how deep in the red the state will be.

"Anything over half a billion dollars is going to be difficult, " said state Sen Claire Robling, R-Jordan.

Robling said mixed economic indicators leave her wondering what the state's budget situation will be. Robling, who chairs the Senate Finance Committee, said the bright spots include a lower unemployment rate and stronger consumer confidence. But she said Europe's debt crisis and the political gridlock in Washington D.C. are potential anchors to solid growth. Come January, it will be a difficult session if Minnesota faces another big deficit, she said.

"We'll probably go back and relook at our bills that we passed last year and see if some of those additional cuts could be implemented. We did pass them last year so I know they can get through the Legislature but that whole discussion with the governor will be difficult," Robling said.

Another deficit will likely mean another political showdown between the governor and Republican lawmakers. Dayton, who pushed for an income tax increase on top earners to erase part of the deficit earlier this year, isn't saying how he plans to address another deficit.

"Some people's idea of reform is to slash and burn. I want government to work better for the citizens of Minnesota..."

"I'm not going to borrow trouble, so I'm waiting to see what the forecast is, what it's going to require," Dayton said. "I have certainly given it some thought, but I haven't come to any conclusions."

But Dayton and Republicans have been preparing their talking points and staking out their political positions. Since the shutdown in July, Dayton has been pushing efforts to improve government efficiency and attract businesses to invest in Minnesota. He's even been giving pep talks to state workers.

"This is a really exciting event because this is what government service is all about. It's about extending ourselves on behalf of the people we serve," he said.

Earlier this month, Dayton honored public employees who saved the state money by improving government services. The event served as a perfect example of how the governor views the budget — he wants to avoid cuts, but improve the way services are delivered.

"Some people's idea of reform is to slash and burn. I want government to work better for the citizens of Minnesota and there's a lot of really great work that goes on that is unrecognized and unappreciated," Dayton said.

Republicans in the Legislature have also been holding events.

"Talking about a fight about should we raise taxes or shouldn't we? They've had enough of that. They want to see what you're going to do differently."

"What we've been doing is traveling around the state and looking for really good ideas at the grassroots level, if you will," said Republican House Majority Leader Matt Dean.

In October, Dean led a community meeting to gather ideas for their legislative agenda. But it's clear that Republicans already have their own plans. When they kicked off what they call their Reform 2.0 tour in August, GOP legislative leaders focused on changing the tax code, reducing government regulations and requiring the approval of two-thirds of the Legislature to raise taxes.

House Speaker Kurt Zellers said at the time they are looking at changing government over the long term.

"This is stuff that we have been working on for a very long time. It's stuff that the voters are asking us for and have been asking us for and are actually excited about," Zellers said. "Talking about a fight about should we raise taxes or shouldn't we? They've had enough of that. They want to see what you're going to do differently."

Doing things differently may be difficult, especially if the state faces another large budget deficit. With few options left to fix the budget deficit, the debate is likely to focus once again on whether to raise revenue or cut spending.