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Nearly $1 billion deficit reported

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By Don Davis

St. Paul Capitol Bureau

ST. PAUL -- Minnesota lawmakers and Gov. Tim Pawlenty have a nearly $1 billion whole to fill in the state budget.

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That is the figure the state Finance Department will announce this morning after a consultant updated the state's economic picture, which shows fewer tax dollars going into the treasury.

Individual and corporate income taxes have fallen in recent months, which made the deficit bigger than when the November report showed a $373 million gap.

The deficit is for a two-year budget in the mid-$30 billion range. The gap must be plugged by June 30, 2009, but legislative leaders say they plan to take action this year.

Most legislative leaders say overall tax increases will not be used to fix the deficit, but House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said lawmakers must consider all tools at their disposal.

Pawlenty inherited a nearly $4.6 billion deficit when he took office in 2003. But the economy has improved since then and the state actually marked some surpluses.

State Economist Tom Stinson says Minnesota now is in a recession that will last at least through mid-year.

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