Deficit to dominate 2010 legislative session
A sizable state deficit will dominate the next legislative session, which begins when legislators return to St. Paul on Feb. 4. Efforts to control the size of the deficit dominated last session but that doesn’t mean that the problem has gone away. Instead, forecasts released in December show that the state faces a new $1.2 billion deficit for the current biennium, which ends June 30, 2011.
Given the size of the challenge, policy makers will have to focus on filling the deficit — either through additional revenues or more budget cuts. With Gov. Tim Pawlenty’s commitment to no new taxes and the unlikelihood that the House would override a veto of any tax increases, the budget deficit will likely be closed through additional budget cuts. In this environment, even existing programs with strong track records will be at risk.
Looking at the long-term fiscal health of the state, Minnesota will continue to face budget constraints beyond the current biennium. In addition to the $1.2 billion deficit remaining for the current biennium, the December forecast showed a $5.4 billion deficit for FY12-13. Although the Legislature is unlikely to address the state’s full structural deficit problems this session, it will be a dominant force in the November election, where all legislative seats and the governor will be on the ballot.
State Grant concerns
College students and their advocates will be concerned about the impact on the State Grant program, which provides need-based aid to one out of three Minnesota college students from low- and middle-income families. Some of the students attend institutions that are represented by the Minnesota Private College Council (MPCC), but the majority are enrolled Minnesota’s public two- and four-year colleges and universities.
Driven by higher demand for aid this fall, the program already has a $25 million deficit for the current biennium, which ends June 2010. Current law requires that the state make changes in the program for the 2010-2011 academic year that will result in smaller awards and thousands of students losing eligibility.
On other education fronts
In addition to the budget deficit, the other main focus of this legislative session will be the bonding bill. Pawlenty has released his priorities, which include $685 million in new capital projects around the state. Included in his priorities are $130 million for the University of Minnesota and $114.6 million for the Minnesota State Colleges and Universities. The next step is for the House and Senate to craft their own bonding packages.