Jobs and economic development budget bill a mixed bag for workers, employers and housing

Governor Dayton and the Legislature approved a jobs and economic development bill that increases funding by $2 million in FY 2012-13, or one percent. That is a better than the $14 million in cuts approved by the Legislature, but not as good as the $4 million increase proposed by the Governor. Within that overall figure there is significant new funding for some elements of workforce training, business development and affordable housing, but cuts to other areas. All of these services are important blocks in building Minnesota’s future economic success.

The bill includes some additional investments in workforce training and business development:

  • $4 million for Vocational Rehabilitation Services to secure federal matching dollars to provide employment services for people with significant disabilities.
  • $300,000 for State Services for the Blind to secure federal matching dollars to help Minnesotans who are blind, visually impaired or Deafblind with their employment skills.
  • $3 million in one-time funding for the Minnesota Investment Fund to encourage business expansion.
  • $2 million in one-time funding for the Redevelopment Account to help development sites with particular problems, such as environmental contamination.
  • $500,000 for Enterprise Minnesota, a consulting company that works with expanding businesses. This provision was not in either the Governor’s budget or the bill passed by the Legislature.

These limited new general fund investments are largely paid for by cuts in other valuable job training and business development opportunities:

  • The Job Skills Partnership, which supports job training or retraining partnerships between educational institutions and businesses, is cut by five percent in FY 2012-13. 
  • There is a three percent reduction in extended employment, which helps people with significant disabilities to maintain and advance their employment.
  • A number of job training and business development grants that are currently being awarded to specific nonprofits are consolidated into competitive grant pools beginning in FY 2013, with a reduced level of funding. Several business and community development grants are consolidated, and general fund support is cut by 23 percent. Workforce development grants for adults are also consolidated, and general fund support is cut by 11 percent. In addition to these cuts, the Department of Employment and Economic Development is authorized to withhold another five percent of the funds to administer the grant process.

Affordable housing opportunities in Minnesota also face a mixed bag. The agreement includes a $2 million increase for the Housing Trust Fund in FY 2012-13, which will preserve 150 rental assistance opportunities. However, there are $7 million in cuts to other areas of the Minnesota Housing Finance Agency, resulting in a six percent cut in overall funding. This will hurt efforts to preserve and rehabilitate affordable housing units, and help first-time buyers.

The agreement also contains the Legislature’s proposal to transfer $16 million from other funds to the general fund, including a $13 million transfer from the Unemployment Insurance Contingency Account. This is significantly more than the $6 million in transfers proposed by the Governor.

The agreement reached by the Governor and Legislature represents a mixed bag for jobs and economic development in the state. The cuts to services will limit options for families struggling to find stable employment and affordable housing as the state slowly emerges from the recession.

-Scott Russell

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