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Good news -- Minnesota economy sees growth

ST. PAUL - Minnesota state budget writers received some good news Thursday, as a House-Senate conference committee looked at ways to plug a $935 million deficit.

A state Finance Department report showed 4.5 percent revenue growth in February and March, with only the sales tax dropping from earlier projections.

The department drew no conclusions about how the revenue numbers would affect the budget. The next budget forecast is scheduled for November.

Individual income taxes were up 4.5 percent and corporate taxes rose 10.5 percent in the past two months, at a time when many businesses paid bonuses for last year. The sales tax fell 1.6 percent.

Despite the relatively good news, economic uncertainty remains.

The Finance Department report said that all but the most optimistic economists think the country is in a recession. State Economist Tom Stinson has said for weeks Minnesota is in a recession.

"The good news is that this recession is expected to be short and mild," the report said.

In the meantime, a conference committee is looking at differing House and Senate plans to fix the deficit. Like Gov. Tim Pawlenty would do in his plan, both bills would close tax loopholes, use surplus funds and cut state programs to balance the budget.

However, Pawlenty has said he does not like either the House or Senate proposal.

Shacks in play

Pawlenty, a supporter of last year's smoking ban law, remains undecided about whether to support smoking shacks.

"I don't know," the Republican governor said Thursday on WDAY radio in Fargo-Moorhead. "I would have to look at it."

Minnesota representatives a week ago voted to allow bars and restaurants to build what Rep. Bud Heidgerken, R-Freeport, called "smoking shacks." They would be small structures away from the main business where smokers could go, but no food or drinks - or employees - would be allowed.

Pawlenty said existing law requires businesses to take care of customers, such as their health, and he is not sure smoking shacks would fit into that concept.

JOBZ backed

If a bill arrives on Gov. Tim Pawlenty's desk that eliminates the Job Opportunity Building Zones program, it faces a veto.

The governor said that during Thursday's airing of "Hot Talk," on WDAY radio in Fargo-Moorhead.

House and Senate proposals would end future enrollments in the rural economic development program that allows some new and expanding businesses to avoid most state taxes.

Pawlenty, who proposed JOBZ, defended helping only rural communities.

"There are some communities in Minnesota in need of extra help," he said.

Davis works for Forum Communications Co., which owns The Forum. He can be reached at (651) 290-0707 or