National Council of Nonprofits has produced a series of Special Reports on the economy.  Their most recent update, Strategies Being Used by Nonprofit Leaders To Cope with the Nation’s Economic Crisis, summarizes findings from a range of reports and provides some key takeaways.  I found the first tip is particularly interesting:

[B]eing transparent about financial challenges and “staying close to funders” emerged as an essential strategy for many organizations. Savvy nonprofits are asking grantmakers to be transparent – because nonprofits need to know how much to expect, and within what timeframe, in order to conduct realistic financial planning. For instance, asking foundations to expedite payments,  in these times when “cash flow” for many nonprofits feels like “cash drip,” is a fair thing to ask.  Likewise, it is better to hear bad news – that a grant will be smaller, or delayed, or even discontinued – earlier rather than later so that adjustments can be made immediately.

Until you have information about the likelihood and timing of grants and other sources of revenue, it’s hard to engage in realistic contingency planning.  The Minnesota Council of Foundations is doing their best to gather and aggregate data on how Minnesota grantmakers are responding to economy.

• Updated 2009 Giving Outlook 
• 2009 Giving Forecast by Minnesota Grantmakers

Nonprofits Assistance Fund has also created materials to help organizations manage cash flow and make informed financial management decisions.

• Cash flow template
• Scenario Planning tools:
  • Scenario Planning Example
  • Scenario Planning Worksheet: A blank template for you to use

To see all of our financial management tools and articles, visit the Resources section of our website.

Nonprofit Harvest

Training and Resources

• New! Blue Avocado Webinars
• Human Resources for Nonprofits Update from Not For-Profit Accounting
  
• Alternatives to Forming a Charitable Nonprofit an article from Gene Takagi and Emily Chan of the Nonprofit Law Blog
  

Social Enterprise

• More Details on the Social Innovation Fund from Foundation Center DC
  
• New corporate structure could give social entrepreneurs new funding stream
• Foundation portfolios, proxy action leverage social change from MinnPost

News and Other Updates

• Sales tax breaks for nonprofits: New rules in the works from MinnPost
• Weathering The Storm – Financial Health Standard from Charities Review Council

A few weeks ago, Blue Avocado published a great post about the value of Dashboard reports:

Imagine getting a dashboard like this at every board meeting. With a glance, board members could see how the organization is doing and start asking the important questions. The board would also be able to discuss what indicators should be added to the dashboard and which might not be necessary…

It’s hard to imagine driving a car without quick, ongoing access to a speedometer, fuel gauge, or gear position. An organizational Dashboard can be the same, fast way to check in on basics . . . so you can pay more attention to where you’re going.

It was a timely article, because we had just revamped our own dashboards.  We wanted to make sure we were giving the board and staff the most useful metrics about our finances, programs, and other work.  The end result is more useful dashboard for board and staff, but just was useful was a by-product of the process.  It forced all of us to take a step back and consider what information we’re sharing and why.

As the Blue Avocado article states, it doesn’t tell us where we’re going, but it provides critical information that allows us to focus on our work and the road ahead.  A tool that helps you cut through the noise and focus is a great asset.

For more on dashboards, read What Gauges Belong on Your Dashboard? or Seth Godin’s post, Dashboards.

Overhead

There is an interesting debate swirling about nonprofit overhead expenses.  Are they an investment in infrastructure,  money that could be better spent on programs, or something in between? Do donors care?  Should they?  This is Kate’s take:

Here’s my soapbox

I agree that it’s wise to “Do the same due diligence on your donations that you would your investments or your business.” But when I review an investment opportunity, I review based on the expected criteria for a successful business – profitability, market share, and returns. I don’t review their overhead and management costs. So why would overhead be the criteria for a charity?

…Do some due diligence on charities before you donate, just as you would for an investment or business opportunity. Pay especially close attention to how successful the nonprofit has been at achieving its mission. Do they provide information about how effective their programs are and what impact they have on the people and communities that they serve? Do they have a way to measure and communicate progress and/or success?

Join the conversation at Balancing the Mission Checkbook, facebook, or follow the example of Rich Cowles from Charities Review Council and blog about your position.

Late July Harvest

Mergers

• Joining Forces in the Back Office – Lodestar Foundation Resources
• Nonprofit mergers: Putting the best foot forward

IRS Updates

• IRS Releases Final Regulations for Returns of Small Groups
• IRS Training Materials – Governance

Other Resources

• Workshop Resources, Questions and Answers
• Nonprofit Leadership 601: New to Running a Nonprofit: Here’s an Overabundance of Resources
• Turning Crisis Into Opportunity: A Conversation With Two Nonprofit Sector Leaders

Crowdsourcing: What’s Working, What’s Not

A few weeks ago, Kate issued a call for “stories of change and transformation” and in the comments we talked a little bit about how we could leverage the power of our online community and crowd source this. I’ve had a few conversations about tools and tags, but before we jump into tactics, I wanted to ask:

• Is this happening elsewhere?
• Is anyone interested is collaborating on this kind of project?

Let me know in the comments.

Blue Avocado’s new issue includes the financial management article, Finance Fear Factor Ratios.  Unfortunately, a number of people can probably relate to this experience:

A CFO at a troubled organization told me, “The first and last thing I do in the morning and evening is look at our bank balance and see if we have enough cash to meet our next payroll. The budget looks fine, but cash flow is our biggest problem.”

How do you know whether or not you should worry?  Read the rest of the article for ratios and four key questions to help you recognize red flags.

You can also read Cash is Cash, Sometimes for information on what could impact your ability to access your organization’s cash.  And our handy Cash Flow Template is available to help you craft your own cash flow projections.

Calling All Minnesota Social Entrepreneurs

Don’t miss your opportunity to enter the Social Entrepreneurs Cup – a joint venture of Social Venture Partners Minnesota and the Minnesota Cup.  This competition “seeks out, supports, and celebrates Minnesota’s most innovative and effective social entrepreneurs and the nonprofit organizations they lead.”

The deadline is Friday, April 24th, so you have one more week to enter.  It’s an opportunity to win a $20,000 general operating grant and 40 hours of consulting from Social Ventures Partners.

In the News: This Week’s Harvest

• The Pohlad Family Foundation announced $20 million in grant support to businesses and nonprofits.  (Our loan fund is generously supported by the Pohlad Family Foundation.  Our complete list of funders is available here.)

• USA Today launched a new feature specifically for the nonprofit and philanthropic community.  Check out the Sharing section for news on our sector.

• The Foundation Center-Cleveland’s online librarian, Katie Artzner, live-blogged a recent conference session, Navigating Your Nonprofit Through Challenging Times.

• Updates from the Social Enterprise Summit (via the Chronicle of Philanthropy):
  • Nearly Half of Charities Operate Businesses
  • New Legal Status for Socially Oriented Business Gains Ground

• White House Appoints Head of Social Innovation Office

• New York Times:
  • For States, Stimulus Offers Temporary Relief 
  • Economic Stimulus Special Section
• Washington Post:
  • Taking Apart the $819 billion Stimulus Package
  • States Counting on Stimulus Aid to Balance Budgets

Analysis from Center for Budget and Policy Priorities

• Statement by Robert Greenstein, Executive Director, on the Conference Agreement on the Recovery Package
• Economic Recovery Act: Key Provisions (With State-by-State Estimates)

The Nonprofit Angle

• From the Chronicle of Philanthropy:
  • Congressional Compromise on Stimulus Plan Includes Money for Arts, Social Services, and Volunteerism
• The Cohen Report:
  • Reading an Early Draft of the Stimulus Bill Conference Report: Compromise Provisions (Part I)-Spending 
  • Reading an Early Draft of the Stimulus Bill Conference Report: Compromise Provisions (Part II)-Safety Net Tax Relief 
• Washington Post Op-Ed: Where Stimulus Funds Can Make a Difference

Transparency and Accountability

• Recovery.gov
• From ProPublica (Hat Tip: Utne Reader)
  • Will We Be Able to Follow the Money?
  • The Stimulus Plan: A Detailed List of Spending
  • State-by-State Breakdown of the Economic Stimulus Plan?
• ShovelWatch
• ReadTheStimulus.org (Hat tip: A little light reading…readthestimulus.org)
• From the Sunlight Foundation: We Need Online Review of Stimulus Legislation
• Show Me the Spending

The Minnesota Angle (aka Budget Update)

• Minnesota’s stimulus take: About $9.1 billion
• MPR has a special section devoted to news on the Bailout (it complements their coverage of Minnesota’s budget shortfall)
• From Minnesota Budget Bites:
  • Minnesota quick to prepare for infusion of federal funds
  • Revenue-raising options, with their price tags and impact on tax fairness
  • Legislature asks for your opinion about budget solutions at forums around the state
• pubTalk: MN Legislature: Please Fix the Governor’s Budget
• Political Animal (from Pioneer Press): Pawlenty must redo his budget
• Politics in Minnesota does a great daily roundup of stories on the budget and other related news.

Nonprofits and Credit

• Billions in Nonprofit Projects on Hold Due to Credit Crisis, Report Finds
• Charities Set $166-Billion Worth of Construction Plans on Hold
• Credit Crisis Is Leaving Charities Low on Cash

Other News

• NY Times Op-Ed: Soup-Kitchen Accounting
• From pubTalk: New opportunity for “economies of skill”? 
• Half a Million Nonprofits Could Lose Their Federal Tax Exemptions
• POLICY MEMORANDUM: A Scan of Nonprofit Policy Recommendations for the Obama Administration

The Center for Budget Policies and Priorities

The Center for Budget Policies and Priorities has a Special Series Economy Recovery Watch where they post regular updates and analysis on the stimulus package, the state budget crisis, and other economic news.

• Recovery bill’s “Fiscal Stabilization Fund” is important to protecting education and averting state and local budget cuts that would further weaken the economy

The Stabilization Fund would provide funds to partially close state and local budget shortfalls and allow states to avoid some of the most harmful actions they otherwise would have to take to meet their balanced budget requirements.  In particular, it would help avert damaging cuts in state aid to education at a time when school districts are reeling from declines in property taxes caused by sinking property values.

Additional Useful Resources

• What Nonprofits are Saying About the Bailout: A Fast Roundup from Blue Avocado

• From the Cohen Report:
  • What Can Nonprofits Look Forward to in the Economic Stimulus Bill
  • Ensuring a Timely Economic Stimulus: The Benchmark of CDBG Expenditures

• The Artful Manager asks Stimulus or pork byproduct? on the NEA’s possible inclusion in the stimulus package

• Economic Stimulus Package’s “Infrastructure Financing Tools” – a Boost to Charities

The Minnesota Angle

• Impact of federal economic recovery bill on Minnesota

• Update: The stimulus challenge from MPR

Updates

• Sources: Tentative deal reached for $780 billion stimulus package

• Democratic officials say tentative stimulus deal reached

Harvesting the Web

• From Philanthropy Potluck:
  • Nonprofit Survival: Four Steps to Take Now
  • Filling the Gaps: Expectations vs. Reality

• Blue Avocado: The Nonprofit Layoff Issue

• From Scott Russell at MinnPost: One more way nonprofits can save a little money

• Q&A with Nell Edgington – Accelerating Social Innovation

• Global Social Investment Exchange on Philanthropy 2173
  

• Avoiding the Sirens Song of Social Media Fundraising – The Great Social Media Debate?

Minnesota Budget Update

• From Smart Politics a Humphrey Institute blog: Minnesota’s 2010 Budget Deficit Among Top 10 Largest In Nation

• Pawlenty budget makes things worse a Star Tribune editorial written by Dane Smith of Growth and Justice and Nan Madden of the Minnesota Budget Project

• Finance and Commerce
  • Even the small state agencies are taking a hit
  • Pawlenty’s HCAF proposal could cost Minnesota federal stimulus dollars
• Politics in Minnesota:
  • How much would it cost to leverage the additional $2 billion in health care money in federal stimulus package? No one knows
  • The T Word: Which taxes to raise? Five ideas that are circulating at the Capitol

• State think tank leaders find little common ground on economic issues

• From the Star Tribune: Editorial: Tobacco bonds aren’t a lasting fix
  

The Nonprofit Angle

• Nonprofits lobby for fair tax hikes to avoid drastic cuts from MinnPost
  

The Local Government Angle

• The City of Minneapolis: Cuts to the City’s 2009 budget

The budget debate is just beginning, and Governor Pawlenty said his proposal will need some adjustments in the coming weeks to reflect new financial information.

One change will come when Minnesota learns the amount of its share of the federal economic stimulus bill. Another will come next month, when finance officials update the state economic forecast, which is expected to project an even larger budget deficit.

Deferring Revenue and One-Time Solutions

The Governor proposed a number of one-time solutions which will reduce our budget for the upcoming biennium, but will not address the underlying problems that impact our state.

The impact of these decisions have been addressed more eloquently by others (here, here, here, and here). Concerns about their feasibility can be found here and here.

What strikes me is that we have a problem with our business model. Our expenses outweigh our income.

To fix that problem, we must both cut spending and increase revenue. As D.J. Leary writes in his reaction to the budget, we have a structural problem:

This governor has faced two multi-billion dollar budgetary shortfalls since first being elected in 2002 and he still doesn’t appear to have grasped the reality that Minnesota has a structural defect in its overall fiscal configuration.  Minnesota simply has too narrow an income stream to provide government services at the level its people want and need.  The governor’s budget is nothing more than state government’s version of Three-card Monte.

The Governor is proposing some ways to generate revenue – such as additional fees for service – but has taken off the table one way to do this.  “Don’t increase burdens by raising taxes” was one of the Governor’s underlying principles when crafting this budget.

Taxes are a loaded topic.  Deciding to raise taxes, especially in the midst of a recession, is not easy. What concerns me is that the Governor is not willing to consider this revenue stream.

As an example, can you imagine a nonprofit being unwilling to consider an earned income venture or an individual giving campaign when trying to bridge a 14% funding gap? Or an organization that solved this through problem a large one-time grant, using restricted funds for another purpose, and deferring payments to vendors to the next fiscal year.

Unconvinced? Mr. Leary and I are not alone.

Minnesota Budget Trends Study Commission

Minnesota Budget Trends Study Commission was established at the end of the 2007 session to analyze the factors that were contributing to our state’s ongoing budget volatility.  In particular, they looked at the implications of our shifting demographics:

The State Budget Trends Study Commission is established for the purpose of completing a study of the implications of state demographic trends for future state budget conditions, including both expected revenue collections and spending for state government services and local services supported by state revenues.

On January 12, they released a report that outlined some of the challenges facing the “long-term stability of the state budget.” Their findings included, but were not limited to (emphasis mine):

• Despite continuing to rank high among many key social and economic indicators, Minnesota’s economy has underperformed recently relative to the nation.
• Demographic and economic factors will lead to lower growth of state revenues over the next 25 years.
• Minnesota has a long-term structural budget problem, with long term expenditure growth likely to outpace revenue growth.
• Minnesota’s general fund tax base has grown more volatile in the past decade.

Coverage on the report:

• Report: Minn. budget problems need long-term fix from the AP (via the Star Tribune)
• Minnesota budget trends study says changing demographics require revised state financial system from MinnPost’s Joe Kimball
• Report from Minnesota Budget Trends Study Commission from Jerry Zhao of the Humphrey Institute
• A commission with some common sense ideas from Minnesota Budget Bites

How do we Fix the Problem?

The first step to any solution is acknowledging that there is a problem.

Our goal is to share thoughtful analysis on the budget, the proposed cuts, and what it means for everyday Minnesotans on this blog and over twitter (a great big thank you to @tomsheck, MPR’s Political Reporter for live tweeting the press conference).  We will try to bring you the highlights, with an eye on how these changes will impact Minnesota’s nonprofit organizations and those they serve.

Recommended Reading

• State of Minnesota press release
• Star Tribune
  • Pawlenty would balance budget with cuts, federal stimulus
  • Your Voices (especially Budget doesn’t solve deficit, just prolongs it)
  • Losses loom for adults without children
• Minnesota Budget Bites
• Pie charts and numbers of Minnesota’s proposed budget fix don’t tell the whole story from MinnPost
• MPR
  • Pawlenty’s budget: 2.2 percent spending cut
  • Human services cuts inevitable under Pawlenty plan
  • The governor’s budget from Bob Collins’ News Cut
  • Legislature to begin dissecting Pawlenty’s budget proposal

Governor Pawlenty’s Proposal

Yesterday the Governor released his 2010-2011 budget proposal. All of the information is available at the Minnesota State Budget website. State budgets are incredibly complex, and we are still trying to make sense of it.

However, there are some overarching principles, goals, and recommendations that we can unpack.

Budget Principles

•

• Balance the budget (this is mandated by our state Constitution)
• Fund priorities in order of importance
• Strategically position Minnesota for success in a changing world
• Enhance and expand pay for performance
• Don’t increase burdens by raising taxes

Financial Goals

• $250 million in budget reserves to address additional economic risk
• $350 million in cash flow account
• Understate potential level of federal fiscal assistance until finalized
• Improve structural budget – reduce 2012-13 budget gap by nearly half

As the slide illustrates, in order to achieve his goals, he proposes a series of cuts and cost saving measures. (Please note that these are screen shots and the presentation can be downloaded here.)

Budget Assumptions

All budgets have a set of assumptions. Minnesota Budget Bites unpacks some of the Governor’s underlying assumptions:

• He assumes Minnesota will get $920 million in federal stimulus relief (this is just a placeholder amount for now).
• He reduces the FY 2010-11 deficit by $1.3 billion by shifting K-12 education payments into the future.
• He raises close to $1 billion upfront by selling bonds secured with our tobacco lawsuit revenues.

Budget Priorities

• Enhance Minnesota’s job climate
• Improve K-12 education
• Protect state public safety programs
• Maintain military and veterans programs
• Increase government reform and accountability

Budget Cuts

The budget calls for $2,368 million in permanent spending cuts (a 2.2% spending cut). These cuts include:

• Changing eligibility standards for MinnesotaCare, which means that “84,000 people will lose health care eligibility over the next two years.” These changes include:
  • Only those at 100% of the federal poverty level qualify for Medical Assistance (a family of four living on $21,200)
  • Adults without children are no longer eligible for MinnesotaCare
  • Cuts in state reimbursement to hospital and long-term care providers
• $151 million to the University of Minnesota (you can read their response here)
• $245 million in Local Government Aid
• $125 million in County Program Aid
• 5% cut in state agencies

All of these cuts will impact nonprofits.  The changes in health care eligibility, a decrease in reimbursements, and cuts to local and county governments will affect health and human service organizations precisely at a time when need is growing and donations and foundation support is lagging.

These budget cuts, while not surprising, will force nonprofits to make hard choices.

Other Recommendations

• Borrowing $153 million from the Health Care Access Fund.  It often runs a surplus and the state has used these funds to balance the budget in the past.
• Merge the Health Care Access Fund with the General Fund. 
• Sell half of bonds from the state’s tobacco settlement
• Freeze wages
• K-12 payment shifts, totaling $1,294 million.
  • This means deferring state reimbursements to school districts to the following year, known as the “holdback.” The current holdback is 10%, under Pawlenty’s budget it would be 20%.
    

These additional recommendations are primarily one-time solutions that will balance the budget for the moment, but not address the underlying structural problem – Minnesota has a flawed business model.

• Pawlenty plans to cut funds for local governments

• Minnesota Budget Bites has the rundown on the unallotments: Ready, set,cut!!

• More from Budget Bites, House asking for your ideas on how to close the budget deficit

Here’s what the Minnesota Budget Project will be saying this session: State policymakers must take a balanced approach to the state’s budget deficit and avoid policy choices, like excessive spending cuts, that make the economic downturn more painful. The deficit is simply too large to take raising revenues off the table.

• Update: Pawlenty announces short-term budget cuts

• MinnPost asks Deficit spending: Why shouldn’t Minnesota do as the feds do?

But some are asking, what good is a balanced budget if it means widespread slashing and burning to eliminate jobs and services, especially in tough economic times?

• CBPP’s article on the long-term impact: Restoring Fiscal Sustainability Will Require Major Changes to Programs, Revenues, and the Nation’s Health Care System

While the long-term problem should not deter policymakers from dealing with the short-term crisis, policymakers will need to demonstrate to the public and the lenders who finance our short- and longer-term borrowing needs that they are prepared to move the budget toward a sustainable long-run path when the economy improves.

We encourage you to share your ideas with the Minnesota House.  You can chime in about the federal budget and spending priorities on change.org and change.gov.

MCN’s Forum on the Economy

On Tuesday, MCN hosted a forum on the Nonprofit Fundraising and Economic Outlook in 2009.

It included updates from the 2008 MCN Salary and Benefit Survey, the 2008 Minnesota Nonprofit Economy Report, a new 4th Quarter survey of nonprofit fundraising, and the state’s November Economic Forecast.

More on the Forum

• Economic briefing for nonprofits offers some optimism, plus reality checks and strategies, for 2009 from Scott Russell at MinnPost

• Notes from MCN’s Economic Briefing from Philanthropy Potluck

•  Nonprofit Survival: A Special Broadcast on MPR’s Midmorning with Jon Pratt from MCN, Jim Farstad of Intermedia Arts and Melissa Brown, director of research at the Center on Philanthropy at Indiana University.

Read the Reports

• Nonprofit Current Conditions Report

• Nonprofit Economy Report

• The Economy and Charitable Giving: Special Briefing November 2008

Other Resources

• Blue Avocado brings you Twelve Blue Avocado Days of Christmas, our favorites:
  • Seven pairs of bad shoes
  • Two unbalanced budgets

• 20 Emergency Funding Sources for Nonprofits from Fieldstone Alliance

• Kristin Giantris of NFF offers advice in the New York Nonprofit Press Dec. 2008 issue.

• Join the Discussion: Service Response

Paul Schmitz, a member of the Transition’s Innovation and Civil Society Team, kicked off the Change.gov discussion on service by asking to find out more about the social causes and volunteer efforts making a difference in your communities.

Last week, Clara Miller wrote a piece in the Financial Times, More from non-profits now means less in future.  In her article, she cautions against the urge to do “more with less”:

Board members, donors and managers in the social sector will need to summon their courage and embrace an “equity ethic” to ensure that they and the organisations they support will be able to stay the course for the people who need them. To do so, they will need to tame one of their strongest impulses: to do more.

Asking how we can do more with less is a familiar refrain. The Chronicle of Philanthropy recently hosted a live discussion on this topic.

Here is Kate’s take:

I think that we need to challenge the basic question. Is it realistic to expect that nonprofits will be able to “do more with less”? I think that many nonprofits need to ask how to effectively “do less with less.” A strategic question is what programs to keep, and to do them as efficiently and effectively as possible, and what programs to exit, close, or transfer to someone else.

Nonprofits are in a difficult position.  Demands are rising, and organizations are struggling to keep pace.  In this climate, how can we have an honest conversation about capacity?

Perhaps, that is also the wrong question.  What are the consequences if we over promise and under deliver? 

Where does that leave us?

For some ideas on how to make tough choices, consider that “If you have to trim, always trim back to your mission.”  Here are some additional sugggestions from Clara Miller’s article:

• Keep an eye on reimbursement rates as the workload increases. The government pays non-profits less than a dollar for each dollar of services provided (such as foster care, health education, financial counselling), and as some non-profits increase their workload, they dig themselves deeper into a financial hole. Non-profit contractors often accept these “underwater” prices because they cannot bear to turn away those in need.
• Raise capital to fund change. If you need to grow, downsize, merge or simply become more efficient, capital is needed in addition to revenue.
• Difficult times inspire creativity. We have seen non-profits invest in technology that streamlines fund-raising, work “virtually” to reduce office space and/or travel expenses, and merge services or operations with like-minded organisations.

NFF also has a resource article, Navigating the Financial Crisis: A Nonprofit FAQ.  It includes information on what constitutes a recession, how the economy might impact the nonprofit sector, and tips for managing your organization during this time.

So, what are the numbers?

Although the numbers are not as bad as some projections, they are ugly.  What a weird reaction to be oddly relieved that the gap is “only 5.2 billion.”

Minnesota Budget Bites has a great breakdown of the numbers:

• For the current biennium (FY 2008-09, which ends June 30, 2009) the deficit is $426 million (that’s about half the size of the deficit we already closed during the 2008 Legislative Session).
• For the next biennium (FY 2010-11) the deficit is $4.8 billion (add another $650 million for inflation).  That deficit amounts to about 13% of our budget. That’s a lot. State Economist Tom Stinson says this recession is expected to last 24 months – which would be the longest recession on record.
• For the biennium after that (FY 2012-13) the planning estimate predicts a $4.6 billion deficit (add another $1.5 billion for inflation).

By the way, in case you are confused by the $5.2 billion deficit announced in the media – that adds the FY 2008-09 and FY 2010-11 deficits together.

What people are saying

There is, and will continue to be, a lot of conversation on this issue. A great place to go for up to date information is the Budget Bites blog from the Minnesota Council of Nonprofits.

• Deficits: $426 million now, $4.8 billion soon and $4.6 billion later 

• Predictions of a $4 billion state budget deficit

Here are some additional news stories:

• Officials react to Minnesota’s dire deficit projection

• Budget deficit: Pawlenty remains oppposed to tax increases

• Minnesota’s red ink: $5.2 billion; Pawlenty seeks 10% spending cuts

• As Minnesota reels from a record deficit, leaders offer no specifics on recovery

• Op-Ed from Dane Smith (Executive Director of Growth & Justice)

• Minnesota Revenue Loss Pushes State $5.5 Billion in the Red

• Session of a thousand cuts: Thursday’s budget forecast sure to force painful decisions

• Looming Minnesota deficit offers chance to innovate

You can also visit the Minnesota Management & Budget website to see the state’s financial information, the November forecast, and get up to date on budget planning for FY 2010-2011.

What are our options?

The impact will be huge and felt across the state, in every community and every sector.  This figure represents 14% of the state budget.  Minnesota’s constitution requires a balanced budget, so tough choices will have to be made.

Where do we start?

• Budget Bites calls our attention to an article from 2001, Budget Cuts vs. Tax Increases at the State Level: Is One More Counter-Productive than the Other During a Recession? from the Center for Budget Policy and Priorities.

• A more recent article from CPBB outlines proposed budget cuts that would disproportionally impact those most vulnerable.

• Scott Russell at MinnPost weighs the relative merits of cutting rates or eligibility for health and human service organizations.

• Post your ideas and suggestions at Minnesota 2010 and elsewhere.

If you tweet or use delicious, I suggest tagging items as mnbudget. Let’s aggregate our ideas!

(My favorite tweet on this topic was from @dbrauer, who writes for MinnPost: “Seriously, we are going to need MPR’s budget challenge for this deficit thing. Stories today made clear cuts alone won’t do it.” For a bit of levity, check out the Budget Hero.)