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Officials: fiscal cliff would harm Minnesota’s economy

Published 11:28am Thursday, December 6, 2012

ST. PAUL — Minnesota budget officials said the state’s economy would be hit hard if President Obama and Congress can’t strike a federal debt deal to avoid the so-called fiscal cliff.

The warnings from officials at Minnesota Management and Budget came Wednesday as they announced their economic forecast. The agency says Gov. Mark Dayton and state lawmakers face a projected $1.1 billion budget deficit next year, the smallest in some time.

But State Economist Tom Stinson said that would get considerably worse under a fiscal cliff scenario in which federal spending cuts and higher income taxes take effect. He predicts the state would shed 115,000 jobs in 2013-14, and personal income would drop more than 4 percent by 2015. He also said state tax revenue would drop by hundreds of millions of dollars.