Recent stock market fluctuation, revenue dips and unemployment have affected the state's financial outlook.
February 28, 2007
StarTribune
Patricia Lopez
Amid rising economic turbulence nationally, state leaders will take a deep breath today and release a budget forecast that tries to project the state's financial outlook for the next two years.
"We anticipate some weakness in the economy in this forecast," Tom Stinson, state economist, said Tuesday. "The question is whether we've anticipated enough or too much."
The February economic forecast projects state revenues and expenditures, setting the stage for budget negotiations that will determine what the state spends on everything from roads to schools.
The unease surrounding this forecast stems in part from a stock market tumble Tuesday that some described as a "global plunge," state unemployment figures that have worsened steadily since last summer and mounting concerns about a national economic slowdown.
"The last 48 hours have not been filled with economic good news," Stinson said. However, much of the recent turmoil may not be reflected in today's official forecast, which relies on national data gathered at the beginning of February.
Earlier on Tuesday, Gov. Tim Pawlenty said he expected a largely "status quo" forecast that might vary up or down by $200 million.
Given an overall two-year budget of $31 billion, that may not sound like much, but legislators are fretting that a downward deviation could derail most new spending plans.
The previous forecast in November had projected a $2 billion surplus, which spurred a multitude of proposals even though half of that figure was to have been a one-time increase that could not be used to fund long-term programs. DFLers, who control the Legislature, argued that much of the remaining $1 billion might need to be reserved for inflation, which is no longer counted in state economic forecasts.