Saint Paul – With today’s updated budget forecast showing an improvement of $209 million, Governor Tim Pawlenty said the additional revenues should be used to bolster the state’s Cash Flow account in order to help avoid short-term borrowing and provide flexibility as policymakers grapple with a budget deficit now pegged at $994 million.

“While this represents some much needed good news, we are a long way from being out of the woods,” Governor Pawlenty said. “Legislators need to keep in mind that we still face a $994 million deficit. State government should be fiscally responsible with the new money on the table today. It should be used to strengthen our cash flow account, not spent on unsustainable programs.”

Governor Pawlenty called on the legislature’s DFL leadership to present a balanced budget plan as soon as possible, but no later than March 17, two months before the end of the legislative session.

“In recent years, the Democrats have waited until the final days of session to come up with a budget plan and it typically incorporates massive tax increases,” Governor Pawlenty said. “That won’t work and the people of Minnesota deserve a chance to react to their proposals.”

Governor Pawlenty also warned that projected automatic increases in spending should be reformed because they will create long-term pressures on Minnesota’s budget. The forecast anticipates adjusted spending would grow almost at double digit levels from the current budget to FY 12-13, at a time when personal incomes are growing in the low single digits, if at all. Governor Pawlenty characterized those future spending projections as “an out-of-control spending escalator that must be shut off.”

“Incorporating my proposed budget recommendations, we’ve brought annual spending increases down to an average of less than 2 percent per year,” Governor Pawlenty said. “Before I became governor, the average growth in the budget was more than 21 percent every two years. We can’t return to that kind of unsustainable growth. The ravenous appetite for more and more government spending has to come to an end. We need to keep taxes down in order make Minnesota competitive and attract jobs.”

The Governor also encouraged legislators to place his Spending Accountability Amendment on the November general election ballot. The proposed constitutional amendment would bring greater certainty to the budget process by capping future spending at the amount of revenues actually brought in during the previous budget period.

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