ST. PAUL, Minn. (WCCO) — A day shy of our fall revenue forecast, Gov. Mark Dayton is sitting down with President Barack Obama on Tuesday to discuss avoiding the fiscal cliff as a key component for the Governor’s upcoming two-year budget proposal.

Despite Minnesota’s improving economic outlook, potential solutions discussed Tuesday will have a huge impact the upcoming budget, according to State Revenue Commissioner Myron Frans. Frans must consider how much federal money Minnesota can expect, and the impact of Federal taxes.

“There are a lot of variables this time around,” Frans said. “The housing market is picking up, consumer spending is on the rise, but nonetheless, one of the things that we have to figure out and factor in is the ‘fiscal cliff’ analysis and what’s going to happen to federal spending and federal taxation at the end of this year and beginning of the next.”

NewsRadio 830 WCCO’s Chris Simon Reports

The budget forecast for Minnesota, Frans said, will set the baseline for the knowing the budget condition of the state for the next biennium.

“The Governor will use this baseline to help figure out what kinds of budget decisions we need to make, because we need to know if there is going to be a deficit or a surplus and then we take that into account so that we know what our spending requirements are,” said Frans.

Wednesday’s report tries to incorporate actual projections made by the budget office and economic trends in order to “predict where the state’s going to be,” Franz said.

Along with President Obama and Vice President Biden, Gov. Dayton will be sharing table space with such fiscal hawks as Wisconsin Gov. Scott Walker and five other governors.  Dayton returns Tuesday night in time for the release of the budget outlook on Wednesday.