A new economic forecast shows Minnesota facing a $1.2 billion deficit through mid-2011, and a $5.4 billion deficit in the following two-year budget cycle.
The projections are contained in briefing papers prepared by state budget officials and seen by The Associated Press. The figures were shown to AP by a person who attended a Capitol briefing for state lawmakers and staff Wednesday but requested anonymity ahead of an official announcement later in the day.
Another official briefed ahead of time told the AP that lagging tax revenues were the main culprit.
The figure sets the stage for another budget showdown between Republican Gov. Tim Pawlenty and the Democratic-controlled Legislature. They have repeatedly clashed over spending cuts and attempts to raise taxes, which Pawlenty has resisted.
The governor has said he would prefer to involve the Legislature in crafting a solution rather than making spending cuts on his own, as he did this summer.
In recent years, the biggest cuts have hit health and welfare programs for the poor, college allowances and aid payments to local governments.
Pawlenty entered office in 2003 battling a mammoth budget deficit, and will spend his final year coping with one, too. Ten of the 14 twice-yearly forecasts during his tenure have shown deficits. Lawmakers have been in deficit mode since 2007.
The report analyzes tax collections and spending patterns for the short and long term. Lawmakers rely on the estimates to set and revise the two-year budget, which now stands at $31.1 billion. Another forecast will be produced by early March, about a month after lawmakers begin their 2010 session.
The Minnesota Constitution requires the state to have balanced books at the end of the budget cycle, which ends on June 30, 2011.
The deficit figure for the next budget _ in 2012-13 _ would be even larger if inflation was assumed and the state began repaying $1.7 billion in delayed aid to schools.