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Minnesota State Roundup

Published January 1, 2005  |  January 2005 issue

The story isn't new. Just about every newspaper trumpets state budget shortfalls in its headlines. In Minnesota the deficit for the biennial fiscal year 2006-07 budget period beginning July 1 is projected at $700 million.

While the deficit is worse than the $400 million predicted at the end of the last legislative session, it is less than the $4.2 billion shortage overcome by the state in 2003. Although revenue is expected to rise about 3 percent, state spending is likely to increase more; for example, health and human services spending alone may grow by 20 percent.

Because the state constitution forbids deficit spending, the coming legislative session will have to focus on cutting spending or raising taxes to avoid the anticipated shortfall. Gov. Pawlenty has continually promised that he would oppose and veto any increase in state taxes.

The rubber will meet the road, literally, when the $1 billion annual shortfall for road projects hits the Legislature's agenda. Between 2008 and 2030, the state will need to spend about $38 billion to build and upgrade roadways. Legislative transportation committee leaders have suggested increases in the state's gas tax, currently at 20 cents per gallon, increasing the state sales tax or raising license tab fees to help pay for roads.

Kathy Cobb

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