The forecast comes three months after the state government temporarily shut down as lawmakers disputed how best to close the state's then-projected $5 billion deficit. That estimate was based on an expected 3.2 percent economic growth, a figure that appears to have been too ambitious, state economist Tom Stimson said.
According MPR, Stimson told the legislature that national forecasting firms are now projecting 1.5 percent growth in the coming year. High gas prices, natural disasters on the East Coast and political gridlock in Washington are to blame for the dampened outlook, Stimson said.
And if Congress fails to pass an extended payroll tax cut, Stimson believes the state's economic growth could fall below 1 percent, a nightmare for state department heads and policy makers. State Senator Clair Robling, chairwoman of the finance committee, told MPR that budget cuts will likely be the solution to any additional deficits. A deficit of $1 billion or more would be difficult to manage, she conceded.
