~ Budget forecast shows $373 million shortfall for current budget period, ending June 2009 ~

Saint Paul – With the Department of Finance’s November Budget Forecast showing a projected $373 million shortfall for the current budget period, Governor Tim Pawlenty today said that state government should hold the line on spending and not raise taxes on Minnesotans.

“This shortfall amounts to approximately one percent of the state general fund budget,” Governor Pawlenty said. “This is manageable and government should tighten its belt. Minnesotans who face heating costs, increasing gas prices and decreasing home values don’t need a tax increase.”

For the current two-year budget period (FY 2008-09), the state has a projected shortfall of $373 million. This budget period began on July 1, 2007 and runs through June 30, 2009. The state general fund budget is $34.5 billion.

Governor Pawlenty said those who claim that more government spending creates job growth are ignoring the facts. National figures over the last four years show that only two states in the top 20 job-growing states have higher levels of state and local government spending than Minnesota.

“The answer is not more spending and more taxes,” Governor Pawlenty said. “The DFL believes you stimulate the economy by spending more on government programs and buildings. I believe you stimulate the economy by putting more money into the pockets of Minnesota families.”

Governor Pawlenty said he would propose tax cuts for individuals. Those tax cuts could be funded by “closing corporate loopholes,” a change in tax laws relating to foreign operating corporations.

When Governor Pawlenty took office in January 2003 he inherited a mammoth $4.5 billion budget deficit, the largest in state history and one of the largest state deficits in the nation. The state finished that budget period with a positive balance and cash flow and reserve accounts restored to all-time highs. The state’s fiscal safeguards are now at all-time high levels, with budget reserves at $653 million and the cash flow account at $350 million.