“This is the worst, without a question,” said Jay Kiedrowski, a senior fellow at the University of Minnesota’s Humphrey Institute of Public Affairs.

As the state’s chief financial officer under Gov. Rudy Perpich in the 1980s, Kiedrowski dealt hands-on with the fallout from another major recession.

What’s compounding the current shortfall is that it comes on the heels of already deep budget cuts and under a governor who refuses to raise revenues, he said.

The trends, if left unchecked, will have widespread consequences, from larger K-12 class sizes and higher college tuition rates to bumpier roads and fewer police officers.

“It’s a sad day for Minnnesota,” said Kiedrowski.

The Minnesota Management and Budget Office projected on Wednesday the state is on track for a $1.2 billion budget shortfall for the current two-year budget cycle, which ends June 30, 2011. Most of that, about 70 percent, is due to income tax revenues coming in at a slower pace than expected when the governor and Legislature set the budget last spring.

The $1.2 billion deficit equals about 4 percent of the state’s budget, Kiedrowski said. However, combined with $4.6 billion in spending cuts made by the governor and Legislature before the budget year began and the total cuts represent about 20 percent of the previous state budget.

In other words, for every five dollars the state had to spend last year, it now has just four dollars, he explained.

“I think the governor and the Legislature are going to have a near impossible task trying to find a way to cut that much money out of state government,” Kiedrowski said.

The previous budget cuts have left school districts borrowing money, police departments benching officers and public hospitals turning away patients. The $1.2 billion figure wouldn’t be so imposing “if it weren’t for the fact that the wiggle room is just gone,” said Dane Smith, president of Growth & Justice, a progressive think tank. “There’s no margin for error.”

Another factor that’s making the problem much worse, Kiedrowski said, is Gov. Tim Pawlenty’s budget “gimmicks” and his stubbornness on taxes.

The projected state budget deficit after 2011 has ballooned to at least $5.4 billion after inflation, much of which can be blamed on Pawlenty’s use of short-term fixes and funding shifts to balance the current budget, Kiedrowski said. He cited the governor’s school funding shift, in which $1.7 billion is being withheld from schools until the first day of the next budget year.

“It’s like a person deferring a mortgage payment until January so they can claim they have more money in December,” Kiedrowski said.

In the past, Republican governors including Al Quie, Perpich, and Arne Carlson, have all been willing to increase taxes when it was necessary to balance the budget.

“Gov. Pawlenty is the first Minnesota governor faced with these circumstances that has refused to increase taxes one dollar,” Kiedrowski said.

Pawlenty reiterated that position on Wednesday, saying in a statement following the forecast that state government needs to live within its means and hold the line on taxes.

Kiedrowski traces the state’s budget problems back to the late ’90s when, under Gov. Jesse Ventura, the Legislature permanently cut income taxes while simultaneously increasing spending with dollars rolling in during good economic times.

“As we got into the 2000s, it became clear we overdid it on both the tax and the spending sides,” Kiedrowski said. “We never truly had a balanced budget since.”

Peggy Ingison, who was the state’s budget director from 1996 to 2004, said she believes a “structural imbalance” emerged more recently, in the past couple of years.

“I think we’ve managed to balance our budget, but not necessarily for the long term,” said Ingison, who is now chief financial officer for Minneapolis Public Schools.

Ingison wasn’t prepared to call this the worst deficit forecast the state has ever faced. We’ve had billion-dollar deficits in the past, she said, but the previous budget cuts and the severe national recession make this scenario unique in the state’s history.

“I think we’ve got a long-term problem, and we might not fix it overnight,” she said, “but to the extent we keep pushing it out I think it pretty irresponsible.”

The deficit situation isn’t unique among other states. Minnesota is one of 36 states to report mid-year budget deficits this year, according to Elizabeth McNichol, senior fellow at the Center on Budget Policy Priorities. The average shortfall was 28 percent of a state’s budget. Minnesota was below that threshold going into Wednesday.

“All the states are hurting at the moment,” McNichol said.

Kiedrowski worries Minnesota’s future may look something like California, where revenue problems have ruined the state’s credit rating and stunted its once thriving economy.

“These are not good financial practices,” Kiedrowski said. “Businesses doing it this way would go out of business.”

Originally published Dec. 3, 2009, on BringMeTheNews.com.

Students Beyond Coal, part of a national Sierra Club campaign, will stage a rally today against the fuel, which is a major source of greenhouse gases and other pollution.

“We want to support what the University has done already” to reduce its coal use and energy consumption, said Siri Simons, a sophomore environmental studies student, “and we want to pressure them to keep moving in that direction.”

But is completely cutting coal from the equation realistic?

Someday maybe, but for now the University says it still relies on coal to help provide reliable and cost-effective energy on campus.

The University buys electricity from Xcel Energy, but it operates two steam plants on its Twin Cities campus for heating and cooling. The school managed to cut the carbon footprint of those steam plants by 25 percent between 1998 and 2008, and much of that decrease came from reducing the amount of coal going into the boilers.

Until the late 1990s, coal was the steam plants’ primary fuel source. Around 2000 the school updated both facilities. The St. Paul steam plant now runs almost exclusively on natural gas, with fuel oil as a backup for very cold days when gas is in short supply. And a boiler installed then in Minneapolis allowed that plant to start running on a blend of gas, coal and biofuels.

The steam plants’ emission permits allow it to generate up to 30 percent of its energy from coal or fuel oil. The rest comes from natural gas or biofuels such as oat hulls, which accounted for about 5 percent of the University’s energy production last year.

“We continue to look at ways to operate the plant as less of a polluter,” said Mike Berthelsen, associate vice president of facilities management for the Twin Cities campus.

However, as the school looks to further reduce coal usage, it’s limited by costs, technology and the supply of alternatives, Berthelsen said.

The price of natural gas tends to significantly fluctuate, and going exclusively to that fuel exposes the university to more budget risk. The school would buy more oat hulls, he said, but it can’t find enough sellers. And with its current boiler, the hulls can only be burned in a blend along with coal.

So if not now, when?

University President Robert Bruininks has signed a pledge to make the campus carbon-neutral, but the school hasn’t given itself a deadline for meeting the goal. Students Beyond Coal leaders say it’s time to start talking specifics with regard to phasing out coal burning on campus.

“Coal is America’s dirtiest form of energy,” said Adam Macon, a Sierra Club organizer who helped form the club. “It’s an archaic form of energy that we need to move beyond.”

Macon said they understand it won’t be an overnight fix and that solutions need to be worked through, but they want a commitment from the ‘U’ to move on as soon as possible. The group made their case to the school’s sustainability coordinator earlier this week, and it’s written a letter requesting a meeting with President Bruininks as well.

“I think it’s great that the students are leading the effort to bring the University to a position of leadership on clean energy,” said State Sen. Ellen Anderson, DFL-St. Paul, who will speak at today’s student event (2:30 p.m. at Northrup Mall). “Coal-burning plants are a 19th century technology. Their time has really passed. It just makes sense for a leader like the University to embrace that future.”

Originally published Nov. 13, 2009, on BringMeTheNews.com.