Governor issues offer to close budget deficit through shift, $1 billion in additional cuts

On Saturday afternoon, the Governor presented an alternative way of resolving the remaining differences with the legislature (see it online). There currently remains an approximately $2.7 billion gap to resolve the state’s budget shortfall.

The Governor’s offer includes:

  • $1.75 billion by implementing the K-12 education shift
  • $450 million in cuts to aids to local governments
  • $250 million in cuts to health and human services (this would be in addition to the $500 million that was cut in the recently signed health and human services bill, as well as the $381 million line item veto to General Assistance Medical Care)
  • $190 million in cuts to higher education (essentially bringing funding to FY 2006 levels). However, over the course of the hearing, it came up that the correct figure may be closer to the $140-$150 million ballpark, otherwise federal stimulus funds would be at risk.
  • $100 million in additional cuts, including $50 million cut to the Renters’ Credit and $10 million for the political contribution refund.
  • The Governor would drop his “tobacco bonding” proposal

We have also learned a few more things about the Governor’s cut to General Assistance Medical Care (GAMC).

  • The administration assumes that many of the people who lose coverage through GAMC would switch over to MinnesotaCare, which is funded through the Health Care Access Fund (HCAF). The result would be an $190 million increase in expenditures in the HCAF and would require 62 additional staff to process those anticipated applications.
  • The state would lose $18 or $19 million in federal resources as a result of cutting GAMC.
  • The cut to GAMC would actually take effect in April 2010 (not July), giving the legislature little time in the 2010 Legislative Session to try to address the Governor’s line item veto.

It is important to note that many argue GAMC recipients will not successfully transition to MinnesotaCare because the programs are structured differently. MinnesotaCare is designed to serve working families with a fairly stable life, whereas GAMC serves a population often struggling with mental illness and/or chemical dependency that usually enter the health care system as a result of a health care crisis. The Governor has said he is willing to renegotiate his move to eliminate GAMC, but it would require reopening the health and human services bill that he signed on Thursday.

The Legislature is expected to issue a counter-offer some time tonight.

-Christina Wessel and Nan Madden

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