Federal Deficit-Reduction Decisions Could Damage Minnesota's Economy

St. Paul, Minnesota, August 8, 2012 - Minnesota stands to lose millions of dollars in federal funds for schools, roads and bridges, safe communities, disaster relief and other priorities if Congress passes a deficit-reduction plan that doesn’t use a balanced approach that includes revenue increases, according to a report released today.

The Center on Budget and Policy Priorities analysis warns if Congress does not include revenues, a deficit-reduction plan would likely include major cuts to funding to state and local governments.

Under the House-passed Ryan budget, which illustrates what a deficit-reduction plan that doesn’t include revenues would look like, Minnesota could lose $420 million in federal funding for schools, clean water, police protection and other state and local services in 2014 alone, adding up to $3.8 billion from 2013 to 2021.

“Deficit reduction should not come at the expense of Minnesota’s economic future,” said Minnesota Budget Project Director Nan Madden. “Educating our children, maintaining our bridges and roads, and making our communities safe are some of the building blocks of a strong economy. Cuts to those and other state and local priorities would hurt Minnesota for many years to come.”

The report details the potential cuts to important public services like community health centers, workforce training and placement, heating assistance, water and sewer system improvements, training programs for local police departments, road and bridge repair, and schools.

“It’s critical for Minnesota’s members of Congress to support a responsible and balanced approach to long-term deficit reduction that includes increases in revenues,” said Madden. “The alternative would be deep and dramatic cuts in state and local priorities that undermine our state’s economic future.”

For more analysis on the impact on Minnesota, see our Minnesota Budget Bites blog post.

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