ST. PAUL, Minn. - State budget projections released Tuesday show a deficit of $188 million for the current 2-year financial cycle, and the news for the next biennium looks worse.
The deficits are based on a reduced U.S. economic growth forecast and the impact of legislation passed during the controversial 2017 session, says the November forecast issued by Minnesota Management and Budget. The predicted deficit would grow to roughly $586 million over the next three years, but forecasters warn that uncertainties with the federal budget could impact those numbers either positively or negatively.
The bleak outlook comes after a string of budget surpluses in recent years and more than $650 million in tax breaks passed by the Republican-led Legislature earlier this year.
"Today's forecast is a reality check," MMB Commissioner Myron Frans told reporters. "The risk that our current economic expansion will come to an end is real. We always have to remember how quickly surpluses can turn to deficits."
Governor Dayton and Republican lawmakers will have to resolve the budget problems even as they try to repair their strained relationship after the bruising court battle over Dayton's line item vetoes of legislative funding after the 2017 session.
The Legislature is due back in St. Paul on Feb. 20.