This week, state economists released an updated state budget forecast for 2010-2011. The good news is that the recently approved federal stimulus package will help cushion some of the growing budget gap — about $1.8 billion in federal money will be available to help Minnesota’s immediate budget shortfall.

The bad news is that total state budget deficit still has grown by nearly 25 percent since the last forecast was released in November, totaling $6.4 billion for the next two-year budget cycle. With the federal money, the immediate budget problem that lawmakers must fix before May 18 is $4.6 billion. That’s still a daunting number that will require major cuts in state services and state spending over the next few months.

While I’m pleased the federal government is offering short-term help, these budget numbers are a real cause for concern. State economists said the deficit plunge is due mostly to a significant, $1.3 billion drop in revenue collections since November, partly the result of fewer Minnesotans collecting income and, therefore, paying taxes. Additionally, Minnesota is on path to lose 120,000 jobs in 2009, which is equal to three full years of average job growth in normal economic times. It’s clear that our state and national economy are in downward spirals, which mean the legislature must not only focus on fixing this budget shortfall, but on creating new policies that will bring economic recovery and long-term success for Minnesota.

It’s a simple fact that we can’t solve a $4.6 billion deficit — or the $6.5 billion projected deficit for 2012-2013 — without major spending cuts that are likely to impact every Minnesotan. However, this also is an opportunity to re-evaluate the way the state has been doing business and whether adjustments can be made to respond to our changing economy.

There certainly are areas where we can permanently reform spending habits. Working on health care reform that cuts costs and increases accessibility is one example. Shifting some of those savings into new, job-creating programs and tax incentives is another way to plan for economic recovery. These are some of the ideas the Senate will be considering in the next several weeks as we focus on a combination of tax reforms, spending reforms and budget cuts that will solve the deficit as well as set up Minnesota for a successful future.

Of course, the way we achieve this goal will be the main point of debate between now and when the legislature adjourns on May 18. Now that the firm budget numbers have been released, House and Senate committees will begin crafting their own budget proposals to respond to the governor’s ideas released last month. We will be relying heavily on comments we heard from Minnesotans during the statewide town hall meetings held in February.

The forecast was not the only thing happening this week. I was honored to receive the first-ever Friend of the Telecom Industry Award from the Minnesota Telecom Alliance conference. It’s the group’s 100th anniversary this year, and I was pleased to be recognized at the event. Telecommunications isn’t something that usually gets a lot of attention, but it’s such an important part of our everyday lives. I’ve been working hard on the issue since coming to the Capitol and I was very happy to be thanked for the work I’ve done.

If you have any questions or suggestions on the budget that you wish to share, please do not hesitate to contact me at 651-296-9247; sen.dan.sparks@senate.mn; or 317 State Capitol, St. Paul, MN 55155.