This coming week will bring a pretty significant change for me, ending what has been a difficult and challenging -- though always rewarding -- City Council career and beginning a new tenure representing the city I love in St. Paul. Friends and strangers alike have been saying to me, "You must be excited!" That is not the word I would choose. While I am eager to test myself in this new legislative arena, and eager to validate the support and trust the voters of central and western Duluth placed in me, I am also very eyes-wide-open about the difficulties that lie ahead.
We know already that the budget deficit for the next biennium is somewhere in the ballpark of $5.5 billion. Based on economic indicators that continue to trend downward, I am bracing for this figure to grow to perhaps as much as $7 billion by the February forecast. The February figure is important since it will be the one the Legislature is required to use to develop the next biennial budget.
Let's give that deficit figure a bit of context. The total state budget is about $56.5 billion. However, that total includes things such as debt service, federal pass-through dollars and constitutionally dedicated transportation funds. We're really looking at only the state's general fund, at 58.8 percent of the budget, as the place to repair the projected deficit. The total general fund is about $34.6 billion. So a $7 billion deficit would account for a little more than 20 percent of the entire general fund.
These are very real, very serious numbers. And as one veteran legislator stated back in early November, the job of balancing the budget in 2009 will be all the more difficult because of past budget-deficit decisions. The easy cuts already have been made, the "smoke-and-mirror" budgetary tricks already have been used, and the multibillion-dollar tobacco settlement has been spent. It was used to fill the last multibillion-dollar state budget hole.
Plus, after the governor completed his "unallotment" process last week, the state of Minnesota's savings account is officially empty.
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The general fund is comprised of health and human services, at 27.8 percent, and education, at 49.1 percent. Without additional revenues, it's in these two areas where cuts can be expected. There's literally no other way to balance the budget. We could eliminate every other thing the state spends general-fund dollars on and still not cut $7 billion.
The cuts will be real and affect real people. And the size and scope of the deficit is too great for us to tax our way out. The current economic conditions just can't support that approach.
As a society, we have spent the past couple of decades convincing ourselves we can have everything without having to pay. The fundamental flaw in this thinking came home in 2008. The tech bubble, housing bubble, and "easy credit" bubbles all burst. In the public sector, a "government services" bubble is now bursting.
Local governments were forced in 2008 to prioritize core services and then make difficult choices on both the expense and revenue sides of the ledger. In Duluth, that meant closing parks, reducing library hours and laying off city employees. And it meant revenue increases, as well, in order to invest in core city infrastructure and to maintain high-priority city services like public safety. As a state we must now make the same decisions.
In 2009, we need to put everything on the table. Literally. We must avoid making sound-bite statements any fifth-grader could be taught to repeat like "no new revenues." But we also must avoid making promises that can't be kept. Instead, we engage each other as Minnesotans in conversations about what truly is important to us and for what truly are willing to pay.
Minnesota cannot afford any longer for its residents to be passive participants. To do so would mean continuing the past decade of disinvestment at every level, in the infrastructure of our state, and in public services like health care and education -- the things that used to make us proud to call ourselves Minnesotans.
