Fiscal cliff uncertainty puts more guesswork into state financial forecast


A state economic forecast due next week will provide a foundation for the budget that Governor Dayton will propose to the Legislature in the new year. But the forecast will involve more guessing than usual, thanks to uncertainties about how federal policymakers will resolve their own budget and deficit questions.

State Economist Tom Stinson tells the Pioneer Press that if Congress dives off the fiscal cliff -- by allowing dramatic spending cuts and tax increases to take effect -- another recession is certain. Many analysts expect an agreement to avoid that scenario. But the ingredients of such a deal are an open question. Stinson says next week's forecast will assume that Congress will put off the hard questions and 'kick the can' down the road another six months or so.

The looming cliff has lots of folks on edge. A group called The Action plans a 30-hour vigil outside the offices of three Minnesota Republicans to mark the 30 days remaining until the deadline.

One of those Republicans is U.S. Rep. Erik Paulsen. Like many in his party, he's on record as opposing higher taxes. But Paulsen told WCCO last weekend he could be open to boosting tax revenue by eliminating deductions and loopholes, as long as tax rates stay the same.

The leader of the Taxpayers League of Minnesota writes in an opinion piece that all the attention focused on Washington is obscuring the prospect of the new Legislature raising taxes here in Minnesota.

Next Up

Governor Tim Walz

Governor Walz to announce 'sweeping' education plan Monday

The governor will address Minnesota at 2 p.m. Monday.

sun country

Sun Country adds 9 more flights out of MSP Airport

The new additions include large cities and popular outdoor destinations.

Zach Parise

Ghosts of Wild's past force split with Sharks

Brent Burns and Ryan Donato thwarted a comeback attempt by the Wild.

Avante Dickerson

Top-ranked recruit Avante Dickerson decommits from Gopher football

The four-star cornerback was the highest-rated recruit in Minnesota's 2021 class.

u.s. district court minnesota - federal court minneapolis

Limits on in-person court activity extended for 45 days

The statewide order extends current limitations through March 15.

D'Angelo Russell / Minnesota Timberwolves

The Timberwolves need more from D'Angelo Russell

The Wolves haven't gotten what they expected since making a blockbuster trade.

oct. 20 snow crash

Spinouts, crashes still happening after snow leaves MN roads a mess

The snow storm caused at least 208 crashes this weekend.


For The Week: Food tips and tricks to get you through the next 7 days

BMTN's food writer Lindsay Guentzel makes life easier for Minnesotans.

snow, plow

Here's how much snow fell in Saturday's storm in Minnesota

MSP Airport had the highest total as of 7 a.m. Sunday with 5.3 inches.


Minnesota lawmakers squabble over looming 'fiscal cliff'

It's only July, but Minnesota lawmakers in Congress are fretting over January – and not because of winter. Some observers say the nation's federal budget is headed for a "fiscal cliff." Without congressional action, on Jan. 1 Bush-era tax cuts are set to expire and $109 billion in automatic federal spending cuts will be set in motion. A partisan rift has split the state's lawmakers as they debate what Congress ought to do about it.

State tax revenue beats forecast, but $1 billion shortfall still looms

Revenue from Minnesota taxes came in more than two percent ahead of expectations in the fiscal year that ended June 30th. A top budget official says the extra $336 million is good news, but doesn't really clear up the clouds on the economic horizon. The state still faces a $1 billion shortfall in the two-year budget that starts next summer. And forecasters are getting less optimistic about the prospects for growth.