Minnesota is facing a two-fisted state budget deficit and both fists pack a wallop. The lead punch is a $1.9 billion projected budget deficit for 2002-03.
According to Finance Department officials, projections for this deficit are running true to form — it’s coming. But the deficit is more aggressive than this.
Next biennium, in 2004-05, the state will face another haymaker in the form of a projected annual $1.2 billion structural budget deficit. That is, the state will permanently be short this chunk of money unless corrective steps are taken.
With the Legislative session beginning on Jan. 29, lawmakers will soon be citing the names of exotic state accounts and shuffling pots of money around with gusto in coming up with budget reduction plans.
But keep in mind, just solving the $1.9 billion deficit for this biennium only partially relieves the state’s fiscal headache. That would still leave the projected annual $1.2 billion structural deficit ready to pounce next biennium.
Fully addressing the state’s budget deficit will take hard decisions. And political risks.
The Ventura Administration has proposed a budget-balancing plan it believes will fully balance the state’s books. But this package proposes increasing taxes on tobacco, gas, and making other revenue enhancing adjustments.
Nursing such a proposal through the Republican House will be difficult — more likely, impossible.
Just recently, Senate Republicans introduced their own budget-deficit package which features a state hiring freeze and the liberal use of tobacco settlement monies to blot out the projected $1.9 billion deficit for this biennium.
But Senate Republicans do not claim their proposal a remedy for the $1.2 billion structural deficit. They would leave that for another day, said Senate Minority Leader Dick Day.
Neither House Republicans nor Senate DFL leaders have yet presented their budget reduction proposals. One veteran Republican senator suggested the House Republican proposal will likely mirror the Senate’s plan.
That remains to be seen.
Whatever new proposals come forth, an acid test of the plan’s credibility is whether it goes beyond the $1.9 billion projected deficit and attempts to deal with next biennium’s structural deficit as well.
In general, Republican and DFL lawmakers are balking at dealing with the structural deficit, arguing a clearer fiscal picture will emerge with the passage of time.
Gov. Ventura, for one, believes this reluctance to grapple with the structural deficit has less to do with waiting for more polished numbers than the looming November 2002 election.
Tough decisions and elections politically do not walk hand-in-hand.
Certainly, it will be hard to solve the state’s budget woes in a single session. That’s true. But lawmakers should show their mettle and make the attempt.
Delayed action is no action at all.
Editor’s note: This editorial was a product of the ECM Editorial Board.
