Over the weekend, the House and Senate wrapped up negotiations with each other and the Governor on a supplemental budget bill covering most areas of the state budget (not included are K-12 education and health and human services). They are debating these bills on the floor of the House and Senate today. In total, the bill would reduce the state’s $1 billion budget deficit by $312 million in FY 2010-11 and $419 million in FY 2012-13. The spreadsheets and bill language are available online. Here are some details about the agreement:
Higher Education – $47 million net reduction in FY 2010-11. The bill cuts funding for the University of Minnesota by $36 million, and the Minnesota State Colleges and Universities (MnSCU) system by more than $10 million in FY 2010-11. This reduces state funding for higher education institutions to 2006 levels. The bill also makes one-time reductions in funding for state work-study, library services and community college emergency grants. The bill reduces funding for Achieve scholarships in the FY 2012-13 biennium. To deal with a shortfall in the State Grant Program, the bill caps the Summer Transitions Grants program, eliminates the 9th semester of eligibility for financial aid, and asks students and families to contribute more to the cost of college.
Taxes and Aids to Local Governments – $111 million net reduction in FY 2010-11, $186 million reduction in FY 2012-13. The tax committee’s contribution to the supplemental budget bill comes in the form of cuts to state aids to local governments, which the state funds with two goals: so that all areas of the state have the resources to provide basic levels of service, and so that property taxes are lower than they otherwise would be. The conference committee made few changes from what was passed by the House and Senate. In FY 2011, aid to counties and cities are both cut by $52.5 million. This comes on top of the $200 million that local aids have already been unalloted in the 2010 calendar year, and together represent about a 31 percent cut in total county and city aids and credits. In the next biennium, counties are cut by $87.5 million, cities by $113 million and towns by $9 million.
In the 2010 calendar year, there will be no increases in property taxes as a result of these reductions – those levies have already been finalized. However, in the next biennium, it is assumed that these aid cuts will result in higher property taxes. The impact on the state budget in FY 2012-13 is a projected $8.9 million increase in state-paid property tax refunds to homeowners and a $9.2 million loss in revenues (from higher property tax deductions on the income tax). The aid cuts are significantly smaller than proposed by the Governor, and the legislature also rejected the Governor’s proposals for a $106 million cut to the Renters’ Credit and eliminating the Political Contribution Refund (part of the state’s public financing of elections) in the next biennium.
Public Safety – $35 million reduction in FY 2010-11. The largest single reduction in this budget area comes from a one-time transfer of $11 million from the Fire Safety Account to the general fund. The bill also appropriates $2 million from this account to pay for firefighter education and training.
The final agreement reduces funding for the Supreme Court, Civil Legal Services, the Court of Appeals and District Courts by a combined $10 million. These reductions are higher than the House proposed, but lower than the Senate and Governor’s proposals. There is a net $1.5 million reduction to the Department of Public Safety. That includes $1.6 million in new spending for Red River flood reduction and $1.3 million in reductions to Office of Justice programs. There is language minimizing reductions to services for battered women’s shelters and domestic violence programs, general crime victim programs, sexual assault victim programs, and youth intervention programs.
The bill also includes an $8.9 million cut to Department of Corrections, which is less than the level of cuts initially proposed by the Governor, House and Senate. The language specifically preserves about half the funding for community correction’s popular Sentencing to Service program.
State Government – $33 million reduction in FY 2010-11. The compromise bill reduces funding for a range of entities, including the legislature, constitutional officers and other administrative agencies and boards. In addition to direct cuts to agencies, the bill seeks to achieve another $3 million in savings through system-wide reforms or, if that isn’t possible, through additional reductions to state agencies. The single biggest budget impact in this area comes from increasing efforts to enforce tax compliance, which is expected to raise $20 million in the FY 2010-11 biennium.
Energy (and Commerce) – $24 million reduction in FY 2010-11. This area essentially comprises the Department of Commerce and numerous special revenue funds. Of the $24 million in reductions in this area, 95 percent consists of transfers from these special revenue accounts. The two largest transfers include $14 million from the Assigned Risk Plan (which helps businesses purchase workers’ compensation coverage) and $3 million from the Petroleum Tank Release Clean-up Fund. Not included in the final bill is a securities registration fee proposed by both the House and Senate. This fee, which the Governor objected to, would have raised between $25 and $28 million in FY 2010-11.
Economic Development – $16 million reduction in FY 2010-11. More than half of the reductions in this budget area – $8.7 million – come from one-time money. The largest transfer is $5 million from the Petro Fund (which funds contamination clean-up grants). This transfer is significantly larger than the $734,000 transfer originally proposed by the House, Senate and Governor.
The bill also reduces funding for housing programs that preserve and improve rental housing by $4.9 million. State workforce development programs are cut by $1.3 million, including reductions to extended employment, Independent Living Services, Job Skills Partnership, Mentally Ill Supported Employment and State Services for the Blind. The Governor’s proposal to transfer $35 million from two funds dedicated to economic development in Northern Minnesota is not included in the bill. The final agreement does include small reductions to the State Arts Board and public broadcasting, but no reduction to the Minnesota Humanities Center (which was eliminated in the Governor’s budget proposal).
Environment – $24 million reduction in FY 2010-11. The final agreement includes across the board reductions to most agencies in this budget area. The Science Museum and the Minnesota Conservation Corps, however, are not cut. There are several large transfers from other funds, including $8 million from the Closed Landfill Investment Fund – a transfer that was not included in the original proposals from the House, Senate and Governor.
Agriculture and Veterans Affairs – $7.0 million net reduction in FY 2010-11. There is an eight percent overall reduction to the Department of Agriculture, including cuts to many grant programs. The largest single reduction is a provision to delay $4.4 million in subsidy payments to ethanol providers. There are no reductions to the Departments of Military Affairs and Veterans Affairs. Instead, the bill includes some new funding for veterans programs, including the military honor guard and services for homeless veterans.
Transportation – $15 million reduction in FY 2010-11. The conference committee cut to transportation is higher than the level of cuts proposed by the Governor, House and Senate in their original proposals. Almost all of the reductions are to transit, including a $1.7 million cut to Greater Minnesota transit and a $13 million cut to metro-area transit (through the Met Council). However, policymakers believe these reductions will be offset by higher than expected revenues from the Motor Vehicle Sales Tax (MVST).
-the Minnesota Budget Project staff











