Dear Friends and Neighbors:

Earlier this past week, virtually all of our local weathermen were forecasting lots of rain and even the potential for quite a bit of wet snow by this Sunday night and into Monday morning. Watching the 10 p.m. news last night (less than 5 days after the gloomy forecast), they are now saying, whoops – never mind, it looks like this system will be far to our north. I have a friend who often says that he wishes he had a job where he could be so wrong, so often and still get paid so much!

What does this have to do with a legislative update? Let me explain:

Our state government hires an economist to do what weathermen do, create long range forecasts to determine the amount of revenue we will (could, might?), bring in over the next two years. Politicians then create spending plans based on that forecast. Unfortunately, our economic forecasts have proven to be as reliable as our weather forecasts.

As an example, our economic forecast for revenue in the 2010-2011 biennium fell approximately $2 billion dollars short of what was desired, forcing Gov. Pawlenty and (eventually) the legislature to implement a series of immediate budget cuts (unallotments), and budget shifts (paying June’s bills in July), to meet the constitutional requirement for a balanced budget. Again, in November 2010, our economist predicted a revenue amount of approximately $32 billion dollars for the 2012-2013 biennium. By February 2011, that forecast had grown to $34 billion dollars, a huge difference in less than four months. Large swings have become the rule, not the exception.

Here is where things currently stand at the Capitol: Both the House and Senate have passed budget bills that spend every penny that the state is forecasted to have over the next two years. The Governor trumps that by about $3 billion more; spending every forecasted penny AND proposing a number of tax increases which will hit the pocketbooks of every single Minnesotan. Unfortunately, if our economist’s forecast follows recent trends and are far rosier than what actually happens, two years from now we’ll be seeing exactly what we are seeing today in terms of huge deficits. This will be true under either plan and under a plan which will ultimately be the compromise solution.

There is a more sane and rationale way. A number of us legislators are pushing for a change in how we develop budgets by basing revenue not on forecasts, but on what was actually collected in the last biennium. For this biennium it would mean creating spending plans of approximately $30 billion dollars. Yes – the hue and cry would be tremendous as folks would surly say we are gutting the state of all that is good and wholesome, but to put it into perspective, this level of spending is approximately what the state spent in 2006-2007. Unfortunately, the number of legislators who espouse this philosophy is currently too small to carry the message of fiscal responsibility. Yet, it is our hope that clearer heads will prevail before the end of this budget setting process. If not, we will continue to fight for this fundamental change for the next budget setting cycle.

When weathermen make long term forecasts, we often create family plans that fit the forecast. When they are wrong, we shrug our shoulders, grumble a bit and then adjust our plans. However, when the state economist’s forecast falls short and government has spent every dollar based on a crystal ball prediction, people’s lives are greatly effected through either higher taxes on families and job providers or cuts in promised services to those most needy. We can and must do better!

God bless and please stay in touch,

Mark Buesgens
State Representative, 35B