Woodard: Budget Agreement 'Not Perfect'

Editor's note: This is text from an electronic newsletter sent from Rep. Kelby Woodard (R-District 25B) to those registered to receive it. To register for the newsletter, click here.

Dear Neighbor,

As the dust settles on the budget agreement passed during the special session (last) week, I want to pass along my perspective on what the budget deal means to Minnesotans.

The most important things we accomplished include reducing the trajectory of spending growth and enacting reform that allows our government to operate more efficiently and maximizes the effectiveness of our tax dollars. Our final general fund budget of $34 billion is far more sustainable than the $39 billion in projected spending for this biennium.  There are one-time increases in spending paid for by one-time revenues (60/40 education shift and tobacco bonds) that were reluctantly agreed to in the final deal as well.

Some of the most significant reforms comes in the health and human services area of the budget. This area was set for a 22-percent increase, but reforms allow us to pare this back to a more reasonable 4.8-percent increase in the next biennium. This is estimated to save Minnesotans $13 billion over the next decade while being responsive to the needs of our most vulnerable.  We also repealed the "sick tax" and passed reform measures to reduce welfare fraud pertaining to EBT cards (including denying the ability to purchase alcohol and tobacco).

This budget agreement is not perfect, but it was important for us to put an end to our state shutdown. I am disappointed we enacted a K-12 education funding shift, but that was necessary for us to meet the governor's demands in reaching a compromise. We did lessen the shift from what the governor had proposed and passed an extra $50 per pupil in the funding formula to alleviate any immediate effects on our schools budgets. We also created greater equity in the funding formula for school districts which is significant for schools which traditionally have been treated unfairly in the formula compared with the big cities.

There still are many ideas to explore that have the potential to provide our state with a more stable fiscal future.  The governor was very receptive to reforming the status quo when we had the opportunity to discuss these concepts with him.  I look forward to pursuing even more reform to that end in the upcoming 2012 session.

I appreciate all the support and ideas I received from folks throughout the district during the regular session and as we worked to put a final budget in place.   I will be scheduling town halls and open office hours in the coming weeks to answer your questions and provide an overview of the 2011 session.

Below are some key points for each of the budget bills we passed this week for you to consider.

Warm regards,

Kelby 

General Fund Spending FY2012-13:

Forecast: $39 billion
Gov Dayton: $37 billion
Final Agreement: $34.3 billion

Judiciary and Public Safety:

Spending:

• $1.8 billion General Fund appropriation, $20 million less than the Governor proposed
• Resolves a 2009 accounting failure and correctly accounts for a $27 million hole in the Dept of Corrections fund
• Funds at a level to maintain core services within the courts

Reforms:

• Prioritizes the use of state funds on state cases over federal cases
• Specifies that funding increases are used to alleviate caseloads and pay for specified operations cost
• Requires a co-payment for prison inmate initiated healthcare
• Saves counties money through lower reimbursement rates for medical services to local prisoners

Transportation

Spending:

• $4.7 billion total appropriation (Dedicated and General Fund) for state and local roads, public safety and transit
• $125.7 million General Fund appropriation, $55 million less than the Governor proposed
• Provides over $2.5 billion for jobs related to the construction and maintenance of Minnesota’s trunk highway system

Reforms:

• Creates a Trunk Highway Economic Development Account to promote economic development, highway improvement and relieve growing traffic congestion
• Improves transit financing and public transparency
• Requires development planners to disclose both capital and long-term operating expenses

Taxes

Spending:

• $4.1 BILLION in DFL and Gov. Dayton TAX HIKES BLOCKED
• $750 million (20 percent) reduction in future spending, achieved through permanent long-term spending cuts

Reforms:

• Provides $30 million in net tax relief, including estate tax relief for farms and small businesses, sales tax exemption for townships, sales tax exemption for public safety water, and sales tax exemption for resale ticket purchases
• Freezes city and county aid at 2010 levels, providing budget and funding stability to local officials
• Modifies county maintenance of effort (MOE) requirements to allow for greater flexibility and cost savings in delivering local services
• Increases homeowner’s property tax refund program and provides more direct property tax relief to middle and lower income homeowners
• Includes federal tax conformity to simplify taxpayer filing and tax administration
• Suspends the Political Contribution Program for two years
• Includes federal taxes in the Tax Incidence Study, allowing for a more accurate portrait of the burden on MN taxpayers

K-12 Education

Spending:

• $13.6 billion General Fund appropriation, $600 million less than the Governor proposed - NOTE: An extension and expansion of the education aid “shift” is included in this measure
• As in the past, existing law provides that the shift will be bought back when the economy recovers and state revenues increase enough to build up a budget surplus
• After taking the effect of the shift into account, the bill appropriates $13.6 billion over FY 2012-13 ($6.3
• billion in FY 2012 and $7.3 billion in FY 2013)
• $50 increase in per pupil funding allowance
• Special education funding increased according to current law growth factors

Reforms:

• Seeks mandate relief with the repeal of the contract settlement deadline (January 15) and penalty ($25 per pupil)
• Repeals the safe schools levy maintenance of effort restriction (no change to total amount of funding)
• Extends by two-years the relief from requiring local districts to spend 2 percent of their basic revenue on staff
• development
• Ends the inefficient and uneven Integration Revenue after FY 2013 to be replaced with a yet undetermined program and spending distribution
• Repeals the state’s authority to borrow from school districts with reserves during a fiscal year (the payment shift is different because that splits payments over two different fiscal years)
• Increases the Literacy Incentive Aid and investment in the MN Reading Corps.
• Creates Early Graduation Scholarships, allowing academically capable and hard-working students to complete their high school education early and to take the funds to the college of their choice
• Requires regular evaluations of principals and teachers

Higher Education

Spending:

• $2.57 billion General Fund appropriation, $180 million less than the Governor proposed
• $21 million increase for the State Grant program to improve and expand choice in higher education
• Increases funding for the Work Study program to allow more students to work their way through college

Reforms:

• Enacts tuition limitation at MnSCU’s two year institutions, forcing systematic reform and efficiency
• Requires the U of MN and MnSCU schools to meet performance benchmarks to receive a portion of their funding
• Utilizes need-based State Grant program and Work Study programs to drive expanded choice in higher education, employment opportunities for students, and minimizes student loan debt

Health and Human Services

Spending:

• $11.3 billion General Fund appropriation, $700 million less than the Governor proposed
• Future spending reduced from a projected 11.5 percent increase to a significantly lower 4.8 percent increase
• No increased surcharges are included in the final agreement
• There are no rate reductions to nursing homes in this bill

Reforms:

• Bends the curve on health care spending to slow the massive growth in the fastest growing part of the state budget
• Creates a defined contribution to privatize public health care for some MinnesotaCare recipients
• Repeals the provider tax
• Prevents welfare fraud by strengthening welfare eligibility requirements and placing greater photo ID requirements and restrictions on the use of EBT cards for alcohol or tobacco purchases
• Includes County Service Delivery Authority, allowing counties to consolidate human service departments into delivery authorities
• Increases funding to small, rural nursing homes and rural pharmacies
• Accepts the Governor’s proposal to ask the federal government for a series of waivers but seeks accompanying reforms
• Promotes personal responsibility and encouraging and rewarding healthy outcomes, encouraging utilization of high quality, cost effective care through Medicaid and MinnesotaCare enrollee cost sharing

Environment/Energy/Commerce

Spending:

• $237 million General Fund appropriation, $39 million less than the Governor proposed

Reforms:

• Provides budget flexibility to maintain outdoors and deal with critical issues such as aquatic invasive species and chronic wasting disease
• Requires review of state agency water management to streamline and consolidate among all agencies that have water programs

Jobs and Economic Growth

Spending:

• $154 million General Fund appropriation, $11 million less than the Governor proposed
• Prioritizes spending on private sector jobs and business programs, not earmarks and special interests

Reforms:

• Ends practice of pass-through grants and legislative earmarking for special interests
• Creates three competitive grants programs in the Department of Employment and Economic Development
• Encourages small-business expansion through newly created loan guarantee program

Agriculture

Spending:

• $76.8 million General Fund appropriation, $1 million less than the Governor proposed
• Prioritizes spending on the livestock and grain industries, the health and safety of our food supply system, and our ever-increasing export programs

Reforms:

Ends ethanol subsidies by making the final ethanol producer deficiency payment in 2012

State Government Innovations and Veterans

Spending:

• $818.9 million General Fund appropriation, $53.6 million less than the Governor proposed
• Reduces funding for constitutional offices, the legislature, and state agencies by 5 percent
• Increases spending for Veterans Affairs and Military Affairs by 2.7 and 6 percent respectively

Reforms:

• Consolidates Office of Enterprise Technology services throughout government
• Requires E-Verify status check to be used by all businesses that contract with the state
• Establishes a Sunset Advisory Commission to review state agencies, improve operations, and consolidate programs
• Calls for strategic sourcing with private firms to ensure efficiencies in state buildings and vehicle fleet management
• Requires the Department of Revenue to seek tax fraud prevention measures and increase delinquent collections
• Links state employee pay to performance, with salary increases subject to sufficient ratings
• Issues up to $10 million in appropriated bonds through MN Management & Budget in a “pay for performance” pilot project with cost efficient non-profits