April 2, 2009
Well, wonder no more.
Last Sunday, I teamed up with Paul Anton (chief economist over at Wilder Foundation) at the DFL Education Foundation’s annual meeting to talk about what the federal stimulus dollars will mean for Minnesota’s budget and the nation’s economy.
Now you are probably like most other people and prefer to spend your Sunday afternoons relaxing, not attending presentations on the federal stimulus package. Fortunately, the event was videotaped by staff at the St. Louis Park City Hall.
The presentation – “Federal Stimulus: Manna from Heaven or Finger in the Dike?” – is available online as a streaming video or an audio podcast. The links are available at the DFL Education Foundation website.
-Christina Wessel
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Budget Process, Economy, Federal Budget | Tagged: budget, Budget Process, budget proposal, Economy, federal, federal stimulus, Governor's budget, stimulus, Taxes | 
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Posted by Christina Wessel
March 25, 2009
We’re at that turning point in the legislative session where we are close to understanding the Governor’s budget proposal and starting to get a glimpse of what the legislature will do.
The Governor’s revised budget does not make many changes to the taxes and aids to local governments part of his original budget proposal. However, since most tax provisions are based on the economy, the fiscal impact of his proposals have all been updated to reflect the new forecast. With these latest figures, the Governor’s budget includes $254 million in tax cuts for businesses and $531 million in spending cuts, primarily to aids to local governments and various property tax credits.
The one new item is a proposal to conform to a piece in the federal economic recovery legislation. The Governor proposes to exempt the first $2,400 in unemployment insurance benefits from state income taxes in 2009 – matching the new federal benefit.
The House and Senate have released their targets, with both indicating that they will pass some tax increases as part of their overall approach to addressing the $6.4 billion deficit. Many legislative leaders have also talked about the importance of restoring some fairness to the tax system, citing the growing regressivity recently measured in the Tax Incidence Study.
One step the legislature should take in the name of tax fairness is to reject the Governor’s proposal to cut the Renters’ Credit. Rental property taxes are among the most regressive taxes in Minnesota, and they have been growing more regressive. In a recent analysis, Minnesota 2020 found that rental property taxes have grown significantly since 2004 and the Renters’ Credit has not been able to keep up. As a result, rental property taxes have become significantly more regressive. Any cuts to the Renters’ Credit would only make this worse.
The Governor’s proposal would cut the Renters’ Credit by $51 million – not only increasing the regressivity of the system, but also taking $51 million out of our local economies.
The Minnesota Budget Project has been asking organizations to join a sign-on letter opposing these cuts and asking individuals to make calls to legislators. Both of these calls to action, as well as other resources, are at our Renters’ Credit at Risk web site. The House Property Tax Division will be releasing their bill next week, so now is the time to act!
-Nan Madden
1 Comment | Action Opportunity, Budget Process, Taxes | Tagged: business taxes, Governor's budget, renters credit, Taxes | Permalink
Posted by Nan Madden
March 19, 2009
New information about the Governor’s budget is now available on the web.
On the Governor’s website (these are the same documents we linked to on Tuesday):
New information on the Minnesota Management and Budget (MMB) website:
- The summary of change items in the Governor’s revised budget. There aren’t too many details, but it does briefly list each change in his budget and the financial impact. This is a good place to look if you are interested in a specific issue and want to know if it got changed, added or removed. (MMB says the actual revised change item pages should be out in the next week.)
- Comparing FY 2008-09 to FY 2010-11 under the Governor’s revised budget. This sheet shows how funding for each area of the budget would change from this biennium to the next under the revised proposal. An interesting overview.
- The revised planning estimates for FY 2012-13 under the Governor budget proposal. This sheet is the subject of some curiousity (see a post by The Political Animal). That’s because the plan posted on the Governor’s website (see above) shows a $8 million positive balance in FY 2012-13, but this sheet on MMB shows a $2.6 billion deficit for FY 2012-13. Why the huge difference? Our guess is it’s because the Governor has proposed a set of spending targets that balances the budget in FY 2012-13, but he has not yet released a specific plan for achieving those targets. So, the sheet posted at MMB says, “If you implement the specifics the Governor has laid out so far, then this is what would happen in FY 2012-13.” And that leaves a $2.6 billion deficit.
So, on Tuesday morning I posed the question: “Does the Governor’s budget make a sincere attempt to balance the budget in FY 2012-13, or does it include more of a placeholder to satisfy the requirements of the law?” For now, the answer is “it’s just a placeholder.”
-Christina Wessel
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Posted by Christina Wessel
March 17, 2009
The Governor’s revised budget proposal will be released at 2:30 today (the presentation will be in the Governor’s Reception Room at the State Capitol). In this revised budget, he will bring his budget back into balance based on the larger deficit figure in the February Forecast.
Here are some of the questions we’ll be asking about the Governor’s supplemental budget.
- Federal stimulus. How does the Governor incorporate the federal stimulus dollars? How much does he use federal dollars to solve the deficit and how much does he use federal dollars to backfill state budget cuts? What proposals did the Governor have to drop to meet federal maintenance of effort requirements? Does the Governor pass up on any federal stimulus dollars?
- One-time solutions. How much of the Governor’s revised proposal is one-time? His initial proposal included $1.3 billion in shifting education funding, $980 million in bonding and $920 million in federal stimulus funds. That meant about two-thirds of his deficit solution was one-time. Now that the size of the federal stimulus may top $2 billion, there is a serious danger of allowing one-time solutions to dominate the solution. We have a long-term deficit, we need a long-term solution. This is particularly important given the next issue…
- Balancing the budget in FY 2012-13. Does the Governor balance the budget not only in the next biennium (FY 2010-11), but also in the following biennium (FY 2012-13)? Actually, that’s a trick question. As the result of a brand new law, he is required to propose a budget that is balanced all the way through 2013. The real question is, does his budget make a sincere attempt to balance the budget in FY 2012-13, or does it include more of a placeholder to satisfy the requirements of the law?
- Spending cuts and revenue increases. How much of the budget solution is permanent spending cuts? Where do those cuts come from? And who bears the burden of the spending cuts? We are in a real pickle. In order to solve the state’s structural budget problems, we need long-term solutions. Our only long-term options are spending cuts and revenue increases. If the Governor has taken revenue increases off the table, then he is left with balancing the budget through drastic spending cuts.
We’ll be looking for the answers to these questions over the coming days and we’ll let you know what we discover.
-Christina Wessel
Leave a Comment » | Budget Proposals | Tagged: budget, budget deficit, budget proposal, Governor's budget | Permalink
Posted by Christina Wessel
February 26, 2009
The staff at the Minnesota Budget Project has been quite busy this week, which is why our blog has been a little quiet. But don’t worry, plenty of information is on the way…
…Starting with us releasing our analysis of the Governor’s budget proposal. Round One: Governor’s Initial Budget Proposal Focuses on Spending Cuts and One-time Measureshighlights the major components of the Governor’s budget and provides a deeper look at the proposed spending reductions. It includes many of the proposals we’ve been blogging on…plus more! Read it, become an expert and impress (or annoy) your friends at cocktail parties.
But remember, things are going to change significantly starting next Tuesday (March 3). That’s when Minnesota Management and Budget will be releasing the state’s February Forecast. We expect to find out that we have a new deficit for the FY 2008-09 biennium (the Governor closed the initial $426 million deficit through unallotment). And, as I’m sure you’ve heard, the deficit for the FY 2010-11 biennium is expected to grow from $4.8 billion to $6 billion (or more). But all this is speculation until we learn the facts next Tuesday.
The Governor will be releasing a supplemental budget later in March. In this 2nd round, he will need to adjust his initial budget proposal to respond to the new deficit figures and incorporate the impact of the federal stimulus bill. Under these unusual circumstances, it will nearly be like starting from scratch.
And we have some advice for the Governor and legislature as they try to address the budget gap. First, I have an op-ed in the St. Paul Pioneer Press today (Make the numbers add up to a future that works) outlining a few ideas for how we can design a budget that kick-starts our state economy, builds a workforce ready for the future and keeps our families strong through the recession. A key part of that – raising revenues! So be sure to check out our recent piece on revenue raising options.
-Christina Wessel
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Posted by Christina Wessel
January 23, 2009
The Governor is expected to release his budget proposal next Tuesday (January 27th) at 11:30 a.m. at the Department of Revenue in St. Paul.
The date is firm – although the time and place are always subject to last minute revisions. We’ll let you know if we learn of any changes.
The budget documents will also be posted on the Minnesota Management and Budget website after the release. We’ll post the specific links on Tuesday.
Otherwise, take a deep breath, enjoy the weekend, and get ready for the sure-to-be-epic budget battle of 2009.
-Christina Wessel
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Posted by Christina Wessel
