CHICAGO — The Minnesota Democrat-Farmer-Labor Party's Mark Dayton officially became the governor-elect Wednesday after Republican challenger Tom Emmer conceded the race.
Dayton's narrow election-day victory in November, which featured a winning margin of just under 9,000 ballots, triggered an automatic recount.
The recount did not dramatically alter the final tally and Emmer, a state representative, conceded to Dayton, a former U.S. senator, saying he would not pursue litigation challenging the results.
Dayton, 63, takes office Jan. 3.
Minnesota is facing a projected deficit of $6.2 billion in its next two-year budget cycle, which begins July 1.
The legislative gridlock that has dominated the state in recent years is expected to continue now that Republicans came out of the wilderness to win control of both chambers of the Legislature but face an incoming Democratic governor.
The current Republican governor, Tim Pawlenty, often clashed with the DFL, which it currently controls the Legislature.
During the election, Dayton floated a proposal to raise income taxes on wealthier state residents to generate new revenue. Republicans have vowed to reject any such move, but have not said how they would balance the budget.
Dayton acknowledged the hard road ahead for Minnesota after the state's latest revenue forecast was released last week. He said the governor and lawmakers are together going to have to face the "very, very difficult task of balancing a budget that has a 19% deficit."
Democratic lawmakers have said they prefer a budget fix that relies on a mix of measures, including cuts and new revenue. Dayton has said he remains open to all proposals.
"As far as I can tell there are no good options," he said.
Dayton is expected to name his fiscal team next week. Steve Sviggum is currently serving as the commissioner of the management and budget office.
State debt manager Kathy Kardell recently resigned to take a newly created position on Hennepin County's finance team.
Until a replacement is named for Kardell, debt management is being handled by Sviggum, deputy commissioner Jim Schowalter and financial analyst Sue Gurrola.
Minnesota's latest forecast boosted the looming deficit $590 million higher than previous estimates, but also contained some good news with an expected surplus of $399 million when the state closes its books June 30 on the current biennium. Revenues for the 2012-2013 period are forecast to grow 5%, or $1.5 billion, over the current two-year revenues, but spending is projected to grow by a full 27.5%, or $8.3 billion.
The looming deficit is due mostly to the use of non-recurring, one-time savings to support the current budget.
Those measures include federal stimulus aid and shifts in K-12 school payments, which have allowed the state to balance its budget without major cuts or tax increases.
"Absent significant changes, the current level of spending, matched against revenue growth permanently lost during the recession, will likely create significant budget gaps well beyond fiscal years 2012 and 2013," economists warned in a forecast report.
The governor uses the annual November forecast, which is released in early December, to craft a budget for release in mid-February.
The Legislature uses the February forecast released in early March to finalize a budget plan.
All three major rating agencies affirmed Minnesota's ratings on its $4.2 billion of general obligation debt ahead of a summer GO sale.
The state is rated AAA with a stable outlook by Fitch Ratings and Standard & Poor's, and Aa1 with a stable outlook by Moody's Investors Service.
