State faces $1.1 billion deficit

With MPR’s Tim Pugmire…

Minnesota’s latest economic forecast shows a $1.1 billion deficit in the upcoming two-year budget cycle. State finance officials released the numbers and some context this morning.

The new analysis of state revenue and spending obligations shows the same pending shortfall that was projected last March.

Minnesota Management and Budget officials also say revenue in the current biennium will allow for a $1.3 billion payback of the $2.4 billion owed to schools. But those conditions will not continue into the next cycle.

State officials previously cautioned that this forecast has even more uncertainty than usual due to the “fiscal cliff” scenario that’s unfolding in Washington.

MMB will release the full forecast at 11:45, but it seems to indicate that the state’s economy is continuing to improve slightly.

DFL Governor Mark Dayton will use the projected numbers to shape a two-year spending proposal that he must unveil by January 22nd. Dayton will hold an afternoon news conference to react to the new forecast.