The Legislature is moving quickly to pass a “phase one” budget bill that would cut higher education, funding to cities and counties, and other services by up to $1 billion. As we noted when the plan was introduced, this bill is the first part of what appears to be a cuts-only approach by the legislature to the state’s $6.2 billion revenue shortfall.
The proposal was first introduced last Tuesday and has already moved through the committee process in both chambers. It is likely to be on the House floor for a final vote by this Thursday. The rapid action has come at the expense of an informed debate and an engaged public.
Higher education. The legislation cuts funding for the University of Minnesota and Minnesota State Colleges and Universities in FY 2012-13 by $185 million. This reduces funding for higher education below FY 2006-07 funding levels.
Health and human services. The legislation continues some the unallotments ratified during the 2010 Legislative Session, cutting funding for health and human services by $46 million in FY 2012-13 and $50 million in FY 2014-15. This includes permanent cuts to Child & Community Service Act (CCSA) grants – which primarily fund child protection and mental health services – and to emergency assistance for extremely low-income elderly and disabled adults. There is also a permanent 1.5 percent reduction in reimbursements to providers of public health care programs for many basic care services. Reductions to child support enforcement grants that were initially in the bill have been dropped.
Taxes. The legislation would permanently reduce funding for the Renters’ Credit for low- and moderate-income Minnesotans, which means a $170 average cut in the credit received by 285,000 Minnesota households, and permanently eliminates the Political Contribution Refund program. There were also a number of provisions to respond to federal tax changes that were added in committee.
Funding for local services. In both the House and Senate, the largest cuts in the bill come in reductions in state aid to Minnesota cities and counties. The House cuts aid to local governments by $488 million in FY 2012-13 only, planning to address FY 2014-15 later in the session. The Senate makes these cuts permanent, which reduces local aids by $457 million in FY 2014-15.
Additional cuts in 2011. The legislation directs Minnesota Management & Budget (MMB) to make cuts to state agencies in the current fiscal year, FY 2011, which ends on June 30, 2011. The House bill requires close to $200 million in unspecified reductions, while the Senate bill sets a target of $125 million. (The November Forecast projects a $399 million surplus in the FY 2010-11 biennium.)
The legislation lacks specifics about where these cuts would be made. To help identify the potential pool for cuts, MMB has submitted a list of all the unspent funds in state agency budgets – just under $195 million. These are funds that are likely to have an intended purpose - but have not yet been spent. The list includes resources for the State Soldiers Assistance Program, the State Grant Program for higher education financial aid, flood and tornado disaster relief funds, prison facilities and so on. The Senate bill prohibits MMB from cutting funds in some of these areas, reducing the list of eligible unspent balances to $110 million. The legislation does not specify where the $125 to $200 million in cuts will be made, although concerns were raised that money for food for prisoners, seasonal employees at the Department of Revenue, and preparing state parks for the summer season may be vulnerable.
Salary freeze. The House bill also includes a hard freeze on state employee wages.
A good budget process clearly lays out the provisions included in the legislation, articulates the impact of those provisions, and provides opportunities for citizens to respond and give their input.
Unfortunately, this bill has followed an extremely rapid process in both the House and Senate that has hampered a full understanding of what is in this legislation, what the impact of the legislation would be, and the ability for the public to have input in the process.
In the Senate, for example, the spending elements of the bill went straight to the Senate Finance committee, bypassing a public discussion in relevant committees like Higher Education and Health and Human Services.
It is also disconcerting that the bill requires MMB to make $125 to $200 million in unspecified cuts with virtually no legislative or public input. The purpose of the committee process is to ensure that proposals are vetted publicly and the impact of policy changes are discussed.
Because there are differences between the two bills, the House and Senate will need to appoint a conference committee to resolve the differences in the two bills before the legislation can be sent to the Governor.
This legislation follows a cuts-only approach that harms local services, students, low-income families and seniors, and vulnerable children. We hope that the ultimate solution to this budget situation will reflect a more balanced approach, including revenue increases, that helps Minnesotans recover from the economic downturn.
Of equal concern is that the legislation has followed a process that has not allowed for a full debate or meaningful public input. The task facing policymakers this session is enormous and the consequences for Minnesotans will be profound. Therefore, it is essential that the budgeting process fully explores the impact of these decisions and allows for substantial public input.