Budget forecast too iffy to rely on
Minnesota’s state economic forecast, released on Tuesday, says the state could be facing a $188 million deficit in its budget next year. That’s not happy news, but the forecast is based on so many suppositions and uncertainties that it is hardly worth getting worked up about.
A lot of factors the forecasters had to rely on are just guesswork right now. Chief among them is the fact that Congress is still working on the tax reform bill, bringing the House and Senate versions into accordance in conference committee. What shape the final version takes is still up in the air. If it stimulates the economy the way Republicans claim it will, the deficit could dry up.
Congress is also dragging its feet on reauthorizing funding for the Children’s Health Insurance Program. Minnesota would be responsible for $178 million in costs if Congress doesn’t step up. Congress is expected to step up sooner or later. That $178 million influx would just about cover the projected deficit by itself.
The forecast also doesn’t include the $120 million in operating funds that Governor Mark stripped from the Legislature last summer. He’s promised to approve it in the next sesssion. That would raise the deficit.
So until all of these factors solidify, there’s not much in the current forecast that we can call reliable.
A much more accurate forecast should be coming out in March. If it still calls for a deficit, then we can panic.