Monday, February 15, 2010

Governor Releases Budget. The picture at the right is one of a primeval forest and once again this year, Minnesota government finds itself in the middle of the darkest of budget forests with no clear paths cut into it and in possession of a broken compass. We are tripping through thickets, torn at by thorns, beset by troubles, lacking the equpiment of make any headway. . .okay, okay, okay, I guess I'm on the verge of wearing out the analogy, but I think everyone gets the point. We're broke to the tune of $1.2 billion for the remainder of this biennium and the picture for the 2012-2013 remains bleak (insert your own Charles Dicken's "Bleak House" metaphor here) as well, as we are staring at a $5.4 billion gap between revenues and expenditures.

The Governor has released his supplemental budget recommendations for the coming year and it's safe to say that large parts of state government aren't really feeling the love. We in the education community need to thank our blessings as we have been spared from the budget axe--at least for the first round--yet again and we need to thank our lucky stars for that.

That doesn't mean that we are out of the woods by any means. This is our high water mark and it's likely that the stars are going to have to line up perfectly for us to remain unscathed in throughout the session. The first obstacle to continued budget protection is the February forecast coming out in a couple of weeks. No one seems to know what the forecast will say in terms of how the budget situation has been changed--if at all--by last quarter's economic performance.
The only suggestions that Governor has forwarded for K-12 education is a formalization of the property tax shift and aid payment deferrals he enacted by executive order last June. He is seeking savings through more cuts at the Minnesota Department of Education (MDE) and is actually seeking some minor appropriations to facilitate data collection and rule-making changes. He is also proposing that collective bargaining results be collected and published in a consistent format by MDE.
Although K-12 funding is left intact by the Governor, he is suggesting some changes to local government aid that will raise property taxes and as SEE districts are located in areas that are more property tax sensitive, these changes will potentially have a greater negative effect in SEE districts. As I prepare for our legislative kick-off on Thursday, I have come across statistics that bear out our impression that the education funding system is getting more inequitable as it relates to property tax effort and the resulting yield in revenue generated through the property tax. Just something to watch.
The other problem that leaps out in the Governor's budget proposal is the fact that there is a budget hole of approximately $400 million that requires federal action in the proposed jobs bill if it is to be filled. In the absence of federal action that would extend the federal medicaid match, we will be staring at an additional $400 million in budget adjustments that need to be made.
All in all, it has not been a red-letter day for state government. While it only marks the starting line in the two-to-three month journey that lies ahead of us, the initial parameters have been drawn and we can now at least see into the gear box of the possible solution. Chilling and comforting at the same time.
Minnesota Management and Budget Link for 2010 Supplemental Budget: http://http//
Bonding Bill Poised to Pass. The House is discussing the 2010 bonding bill this afternoon and after a recess for committee meetings, it will be passing its version of the bill this evening. The Senate passed the bill last Tuesday on a vote of 52-14 and it is expected that the House bill will pass as easily today, but that doesn't mean there won't be amendments and discussion.
The biggest difference between the Legislature's approach and the Governor's is the overall size of the bill. The Governor suggested a bill of about $700 million, while both Houses of the Legislature are flirting with a bill in the billion dollar neighborhood. Clearly the overall cost of the bill will come down and it appears that the Governor will insist on a total package from the Legislature that he can approve as opposed to simply line-iteming $300 million out of the results of legislative negotiations.

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