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Floor Session Date: Thursday, January 10, 2002
Video Coverage: Governor Jesse Ventura, Finance Commissioner Pam Wheelock, and Commissioner of Revenue, Matt Smith, release the Administration's plan to deal with the state's $1.95 billion budget shortfall.
About the Session:
Governor Jesse Ventura, Finance Commissioner Pam Wheelock, and Commissioner of Revenue, Matt Smith, release the Administration's plan to deal with the state's $1.95 billion budget shortfall. The proposal includes spending cuts of $700 million for the current biennium, new taxes or tax
increases to raise nearly $400 million for the current biennium, and the use of the $653 million
budget reserve. In fiscal years 2004-05 the plan cuts $1.3 billion in spending.

Recommendations include the following spending cuts: 1 percent cut in K-12 budget for current
biennium; 2.6 percent for the next biennium; 5 percent cut to U of M and MnSCU in fiscal year
2003; 5.1 percent cut in state aid to cities; 2.8 percent cut in state aid to counties. State agencies are cut 5 to 10 percent under the plan.

Tax increases include: 5 cents increase in gas tax; increase in cigarette tax of 29 cents (from 48 cents a pack to 77 cents); repeal of income-tax reciprocity agreement with Wisconsin, and expanded
sales tax on services/goods not previously taxed (e.g.- car repairs, legal services, newspapers,
magazines.)

The same November budget forecast that projected the $1.95 billion budget deficit for the current biennium projects a $1.2 billion shortfall in 2005 and each year following if changes are not made.