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Monday, February 28, 2005

February budget forecast

The February budget forecast came out today, and the state's budget deficit has shrunk slightly. But before everybody does a happy dance, it's important to figure out what this means.

The good: the budget deficit is lower. There's an extra $175 million for this fiscal year. The deficit for 06-07 is$466 million, without inflation. This is down around $250 million. Any time the deficit shrinks, it is a good thing.

The bad: It is without inflation. This Enron-style accounting trick lets the state get away with pretending that deficits are lower than they are in reality. If you count inflation, the deficit is still over $1 billion. Our schools, highway and road builders, doctors, and long-term care providers can't wish away inflation like the state can, so this is still the number to use. And forget about the new numbers saying that we will soon return to budget surpluses. Again, that is without inflation, so it doesn't matter.

The state still faces a budget problem. We cut taxes too much the last time around, and instead of rectifying this in a fair way, Governor Pawlenty wants to nickel-and-dime Minnesotans to death with "fee increases," which is weasel speak for "tax increases." Taking a look at our tax structure is the only fair way to fix this budget, so we don't have to continue putting all the pressure on our schools, transportation system, and health care systems.


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