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Nearly $1 billion deficit reported

ST. PAUL - Minnesota lawmakers and Gov. Tim Pawlenty have a nearly $1 billion hole to fill in the state budget. That is the figure the state Finance Department announced this morning after a consultant updated the state's economic picture, which ...

ST. PAUL - Minnesota lawmakers and Gov. Tim Pawlenty have a nearly $1 billion hole to fill in the state budget.

That is the figure the state Finance Department announced this morning after a consultant updated the state's economic picture, which shows fewer tax dollars going into the treasury.

Individual and corporate income taxes have fallen in recent months, which made the deficit bigger than when the November report showed a $373 million gap.

The deficit is for a two-year, $34 billion budget. The gap must be plugged by June 30, 2009, but legislative leaders say they plan to take action this year.

Most legislative leaders say overall tax increases will not be used to fix the deficit.

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The bad news delivered today means a public works funding bill likely will shrink. Pawlenty suggests the new figure should be $825 million, down from $965 million he and legislative leaders picked earlier. With that figure, the governor said, hockey arenas such as in Bemidji and Crookston will not be possible.

However, Pawlenty said he considers a Duluth Entertainment Convention Center expansion "grandfathered in" because he and legislative leaders have agreed to fund it for three years.

Pawlenty said he considers the deficit manageable. Legislative leaders say they will wait until Pawlenty delivers his plans for budget changes next week before they come up with their own budget-fix proposals.

Pawlenty inherited a nearly $4.6 billion deficit when he took office in 2003. But the state actually marked some surpluses since then.

State Economist Tom Stinson says Minnesota now is in a recession that will last at least through mid-year.

Reporter Don Davis works for Forum Communications Co., which owns the Budgeteer News.

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