Minnesota recovery will take years

March 3, 2012 by  

Any gains made recently in the Minnesota economy are a cause for celebration by residents and businesses such as print companies. However, state legislators, who have been gobbling up financial reserves and borrowing a few dollars here and there to supplement weak budgets, must realize that it will take a long time for the financial health of Minnesota and the Minneapolis St. Paul area to recover.

Any new cash in a strengthening economic environment must be channelled back into financial reserves and to pay back funds which are in the billions of dollars, owed to Minnesota public school systems.

The commissioner for state management and budget, Jim Schowalter, commented:

“The Great Recession pounded us.  One or two, or even three good forecasts are not going to fix that right away.”

That includes a surprise $900 million surplus announced last fall, which was immediately whisked away to fill the empty bank accounts for the state reserves. More cash must be injected into the reserves to completely replenish the funds, and once that is complete, officials have to pay off a stack of IOUs, including $2.7 billion owed to public schools.

Minnesota’s debt is so deep that it will indeed take years to repay.

The good news is that Minnesota’s unemployment rate is dropping and is now the lowest it’s been since 2008. Job growth is strongest in Minneapolis, St. Paul, Rochester and Mankato areas.

“We are keeping our fingers crossed and hoping for the best,” said state Sen. Warren Limmer, R-Maple Grove.