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Gov. Arne Carlson Blog: Budget Deficits — A Time for A Growth Strategy

With the advent of fall comes football, back to school and an early focus on the next legislative session.

With the advent of fall comes football, back to school and an early focus on the next legislative session. The latter is as welcome as a trip to the dentist.

The reason is simple and that is the reality that weak economic growth and declining income spell trouble for state budgets dependent on income and sales growth.

Currently, Minnesota will likely face a deficit of approximately $1.9 billion for 2013-14. This figure does not include any inflation or payback of the $2.1 billion from K-12 education. But the real surprise will be on the revenue side. If my recollection is correct, the February forecast pegged projected economic growth at 3.2 percent. That is turning out to be highly optimistic. Two percent or less is more likely. This means that revenue expectations will be considerably lower and we can expect a shortfall to be announced in the November forecast.

Rather than being surprised in November, it would be more prudent to plan for another deficit now. Further, I would contend, this should give our leaders the opportunity to do it right. By that I mean putting an end to the rolling deficits that have been the norm for the past nine years and produce an integrated budget that is pro-growth and projects out revenues and expenditures for at least four years with inflation included on both the revenue and expenditure side.

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When I use the phrase “pro growth” I mean tilting our expenditures and tax system toward long-term job growth. This means investments that will advance growth and a tax code that entices growth. The simple reality here is that we cannot cut or tax our way to success. We must grow the economy.

The true opportunity here is that we as a state have an enormous number of talented people from both the private and public sectors that can put together a pro growth strategy. Political leadership should be modest enough to know that they cannot do it alone.

The process really starts with the Governor and Legislative leaders having a free ranging conversation with leaders from groups familiar with this area such as the Itasca Project, the Economic Club, the Citizens League – past and present and some solid financial minds including the University of Minnesota and former state government Finance Commissioners.

The prerequisites are simple: a commitment to make it work.

From here, the group can formulate a process that leads to comprehensive legislation. But the key in the opening conversations is that they should take place in a comfortable and relaxed environment with privacy respected. The goal here is to grow the economy not the partisan feud.

A successful product will give all of us a sense of success and a better future for our children. It will also restore our pride in the quality of our governance.