Deficit Spurs Hiring Freeze

As Minnesota awaits the release of a new revenue forecast tomorrow, Gov. Tim Pawlenty has ordered a hiring freeze due to a growing budget deficit.

The fiscal shortfall is expected to grow by two to three times when the new forecast is released by the Department of Finance. The previous forecast was released late last year. The state issues formal revenue forecasts at the end of November and February.

In the November forecast, officials announced a $373 million deficit in its current budget that runs through June 30, 2009, and a $1.2 billion deficit — when inflationary increases in spending are included — going into the next biennium. The deficit was blamed on lower than anticipated tax collections.

In a letter to his department heads last week, Pawlenty wrote that the administration needed to “tighten” its own belt to “set an example of good fiscal stewardship.”

“Effective immediately, I am directing all state agency commissioners and board executive directors to implement hiring restrictions,” the governor said. “Positions that become vacant from now until this directive is rescinded should be left unfilled in every possible case.”

Some positions involving public safety were exempt from the freeze. Lawmakers are also looking at areas in the budget to cut.

The state’s $4 billion of general obligation bonds are rated AAA by Fitch Ratings and Standard & Poor’s, and Aa1 with a positive outlook from Moody’s Investors Service.

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