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New state economic forecast due; Minnesota braces for 'sequester'

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Minnesota budget officials on Thursday are scheduled to release a revised state budget forecast for the next two years.

The last forecast was unveiled in November, a gloomy economic snapshot that projected a $1.1 billion deficit over the biennium, and key budget indicators have not changed much, Minnesota Management and Budget Commissioner Jim Schowalter told the Star Tribune.

The forecast is important because it shapes the budget and tax reform debates ongoing in the Capitol as lawmakers draw up plans to lead the state out of the red. Gov. Mark Dayton last month outlined a budget that calls for some of the most sweeping tax changes proposed in years.

Meanwhile, state lawmakers are keeping a close eye on Washington, where congressional lawmakers and the White House are bickering ahead of a Friday deadline, when $1.2 trillion in across-the-board sequestration budget cuts over the next decade would be triggered.

State budgets would have to absorb millions in federal cuts, which would be acutely felt in city neighborhoods nationwide. The Pioneer Press visits North Minneapolis, where a Meals on Wheels program would likely be just one victim of the federal cuts. Nutrition programs for Minnesota seniors could be slashed by $845,000 between Friday and September, the end of the fiscal year, the newspaper notes.

Another example of how the federal cuts would hurt Minnesota: The budget for job development programs overseen by the Department of Employment and Economic Development would be cut by $5.4 million and affect 17,000 Minnesotans, the Legislature's Session Daily notes.

Minnesota schools, too, would face millions of dollars in cuts, the White House noted in a state-by-state breakdown. The Duluth News Tribune looks at how the cuts would hurt the Northland.

Dayton was in Washington this week meeting with other governors and White House officials, and he said chances seemed slim that a deal could be struck to avoid sequestration.

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