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Archive for June, 2009

I just finished listening to a live stream of our state’s Governor (Pawlenty, Republican) discussing his plan to balance our state budget for this biennium. Admittedly I’ve been anxiously awaiting this announcement, as are my colleagues who work with me at one of the largest consortium of higher education systems in the U.S., and most definitely slated for a cut by our governor. Less selfishly, I am following the plans to balance the budget as I have a keen interest in following state and local governmental budgets, the legislative process, and the myriad agencies and hard working public servants attempting to help our good citizens, and the resulting impact decreased budgets have on services to our citizens. That should tell you which side of the political fence I sit.

The governor is using his special power called unallotment (a power granted to Minnesota governors back in the 1930s) to balance the budget.  This is the first time unallotment power is being used to balance the budget at the beginning of a biennium. This can be attributed to the fact that the state’s reserves disappeared due to our governor’s steadfast commitment to not raising taxes under his watch (6.5 years and ticking). And this biennium’s record-breaking deficit gets the same treatment. 

Per Pawlenty just 40 minutes ago, in referring to local government leaders and agencies, who have chosen to fund their gaps by increasing local taxes:

They need to get their head out of the clouds and stop increasing spending. This is the real world! And they need to do it [reduce spending] in the right order. Perhaps they didn’t understand that everyone else was living within their means, maybe now they will.”

Here is Pawlenty’s order (unallotment recommendations). Note: this is not a complete listing of the proposed reductions and shifts. It is just intended to summarize what I heard via the streamed announcement.

1.  Functions Protected (no cuts) : the military, the national guard, law enforcement, veteran’s affairs, and K-12 education

2.  Reductions in Local Aid $300 million as follows:

  • County Aid: reduction capped at 1.19 % for 2010, 2.14% for 2011
  • City Aid: reduction  capped at 3% of their revenues for 2010, and 7.64% for 2011
  • Townships: reductions capped at 1.71% for 2010, , 3.66% for 2011
  • Smaller towns and cities are exempt from reductions; this applies to about 50% of Minnesota’s towns and cities

3. Health and Human Services reductions: highlights

  • Inpatient services not reduced, exempt from unallotment
  • No adjustments to nursing homes in terms of rate payments
  • Puts on hold the formula adjustment (rebasing) to a later year

4. Reduction to Higher Education: $100 million, with $50 million reduction to MnSCU  (Minnesota State Colleges and Universities) and $50 million reduction to the University of Minnesota. Pawlenty indicated this represents about 3.6% of these two systems’ general resource revenues.

5. Reductions to State Agencies: 7.25%  across the board, with public safety, corrections, military, sex offender programs, (and some others) being exempt.

6. Miscellaneous adjustments such as collection of $100 million in revenues due us by the tax reciprocity arrangement with Wisconsin.

One last critique before I sign off this post. I agree with the brief post-announcement (democratic) analyst who said:

Pawlently is using a lot of shifts to balance the budget; he’s shifted $2 billion into the next biennium which means our next governor will inherit that. These are larger shifts than we’ve seen before and the deficit is larger than we’ve seen in Minnesota history. I wonder how his recommendations would have differed if he were running for Governor again. Would he have made the same recommendations and be willing to leave a $4 billion deficit on the table if he were running for Governor?

Note from me: I believe he is already running/posturing to run for VP for 2012. These shifts allow him to leave office and claim he never raised taxes and that Minnesotans lived within their means. The real budget balancing act is yet to come for 2012-3, and whoever runs for Governor knows going in, the state is facing a 4$ billion shortfall with no remainig gimmicks to use. 

So what happens now with the recommendations? They go before the legislative advisory commission (LAC) Thursday of this week, at the capital. After some consultation and feedback from various groups, final decisions [and cuts] will be implemented on July 1st or shortly thereafter.

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