State commissioner says “everything will be on the table” to solve budget deficit

State commissioner says “everything will be on the table” to solve budget deficit

Minnesota Management and Budget Commissioner Jim Schowalter told members of the Big 4 group that the state budget is out of whack from the pandemic. He urged schools, counties, cities and township leaders to all pull together to get out of the shortfall.

Schowalter is looking at a $2.3 billion deficit in the state budget this year and a $4.7 billion structural gap, starting in July 2021. Luckily, he said, the state has $2.4 billion in budget reserves and will need to look at how to best use any federal COVID-19 funds. The budget is not only a numbers exercise, he said, but also a statement of values and vision.

“Everything will be on the table,” Schowalter said, “including past options of shifts, unallotments, along with cuts.”

He is expecting the state revenue forecast in early December to shed more direction on what the state needs to do. “We’re approaching the pandemic response carefully, knowing the state is not going to have a large kitty for any kind of response moving forward.”

When asked specifically about funding the recommendations from the School Finance Working Group, Schowalter said those recommendations will have a difficult reckoning. Since the group work began when the state had a surplus, some recommendations may no longer have the financial supports needed.

He said the overall budget situation will be similar to when Gov. Mark Dayton got the state out of the deficit: “We’re all going to be put in uncomfortable positions. Ultimately, we all have to pull together and find a way through it.”

The Big 4 group is comprised of MSBA, the League of Minnesota Cities, the Association of Minnesota Counties, and the Minnesota Association of Townships.

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