Despite a projected $700 million state budget deficit, the University will still see an increase in its funding from the state, Gov. Tim Pawlenty said Wednesday.

Although State Finance Commissioner Peggy Ingison said inflation could cause the shortfall to increase to $1.4 billion, University officials said they are hopeful the institution will receive the funding it requested.

University President Bob Bruininks said that although the state’s financial situation is difficult, it is improving.

“This problem is less significant than before,” he said.

Pawlenty said the University and Minnesota State Colleges and Universities will receive an additional $205 million to offset increased enrollments.

“It’s a good start to address their additional financial needs,” he said.

Because the University’s enrollment has increased over the last two years, state law requires that its funding should also increase, Bruininks said.

He said the money is important, because it will support students and the University’s academic needs.

“That’s very good news,” he said.

Although the University will receive more money than last year, Bruininks said the Legislature still needs to pass the institution’s two-year budget proposal.

That budget includes funding for graduate, professional and research programs, which Bruininks said are urgent needs.

Sen. Larry Pogemiller, DFL-Minneapolis, said the deficit disappointed him.

“This is very bad news,” he said.

Although he said he thinks the University needs to “put the breaks on tuition increases,” Pogemiller said that will be hard if it does not get the financial suport it needs.

The deficit might also affect last year’s failed bonding bill, which provides funding for University construction projects. The University reintroduced the bill Monday.

“This puts the bonding bill in jeopardy,” Pogemiller said.

Bruininks said that any time there is a deficit, it is hard for some to think about long-term financial needs.

But he said passing the bonding bill could help the state’s economy because it creates jobs.

“This deficit makes passage of the bonding bill more urgent,” Bruininks said. “It indicates a soft economy.”