Transcript fy 2010-11 biennial budget

STATE OF MINNESOTA
Governor Tim Pawlenty
FY 2010-11 BIENNIAL
BUDGET
All budget documents can be found at www.mmb.state.mn.us
A Lot Has Changed in Two Years
• Current budget was set on May 30, 2007 with an
agreement for a $34.6 billion biennial budget
•
Economy was growing at 2.1%
•
2,771,400 Minnesotans had jobs
•
Federal budget deficit was $161 billion (1.2% of GDP)
A Lot Has Changed in Two Years
• Today we are preparing the next budget based on
revenues of $31.9 billion
•
Economy is expected to shrink by 2.5%
•
2,720,400 Minnesotans have jobs
•
Federal budget deficit is $1.2 trillion (8.3% of GDP)
Governor Pawlenty’s Budget Principles
• Balance the budget
• Fund priorities in order of importance
• Strategically position Minnesota for success
in a changing world
• Enhance and expand pay for performance
• Don’t increase burdens by raising taxes
Important Financial Management Goals
• $250 million in budget reserves to address
additional economic risk
• $350 million in cash flow account
• Understate potential level of federal fiscal
assistance until finalized
• Improve structural budget – reduce 2012-13
budget gap by nearly half
Budget Bottom Line
General Fund Expenditures
FY 08-09
$34.36 billion
FY 10-11
$33.61 billion
Difference
-2.2% ($750 million)
Governor’s Budget Solution: $4.8 billion deficit
Shortfall for FY10-11 ($ millions)
($4,847)
Spending Cuts, Savings
2,521
Other Resources
3,197
Tax Cuts, Initiatives, Reserve
(860)
Total Recommendations
Balance
$4,858
$11
Budget Solution: Spending Cuts, Savings
Proposed Changes ($ millions):
Impact
Permanent Spending Cuts
$2,368
Health Care Access Fund & other
Subtotal
153
$2,521
Budget Solution: Other Resources
Proposed Changes ($ millions):
Impact
Federal stimulus placeholder
$920
K-12 payment shifts
1,294
Tobacco appropriation bonds (net)
Subtotal
983
$3,197
Budget Solution: Tax Cuts, Initiatives, Reserve
Proposed Changes ($ millions):
New Spending Initiatives
Impact
$323
Tax Cuts
287
Budget Reserve
250
Subtotal
$860
Governor Pawlenty’s Top Budget Priorities
• Enhance Minnesota’s job climate
• Improve K-12 education
• Protect state public safety programs
• Maintain military and veterans programs
• Increase government reform and
accountability
Minnesota Jobs Recovery Act
• Job creation is the priority
• Improve Business Climate
•
Reduce Minnesota’s high business tax rate
•
Upfront capital equipment sales tax exemption
•
Reinvestment Tax Credit
•
One-year deduction for equipment purchases
•
Angel and early stage capital tax credits
•
50% capital gains exemption
Transforming K-12 Education
• Increase K-12 funding, even in a budget
crisis
• Transform K-12 education funding system
by linking all future funding increases to
improved performance
• Require all districts and charter schools to
use Q Comp performance pay system
K-12 Education Reforms: Q Comp
• 44 school districts and 26 charter schools
currently in Q Comp professional development
and achievement-based pay program
• For districts not currently in Q Comp, authorize
permanent per pupil funding increase of $300, an
amount comparable to a 5% increase in the
general education funding formula
K-12 Education Reforms: Pay for Progress
• New “Pay for Progress” initiative will link additional
K-12 funding increases to student achievement
• School districts and charter schools will receive up
to an additional 2 percent per student on the
general education formula for students meeting
standards or showing reasonable progress toward
achievement
Governor’s Proposed FY10-11 Budget
General Fund Spending
$33.611 Billion
Property Tax Aids/Cr
8.6%
Health & Human Svcs
33.7%
Environ, Energy & Nat
Res
1.0%
Economic Development
0.7%
Transportation
1.1%
Public Safety
5.0%
Higher Education
8.5%
Agriculture & Veterans
0.8%
State Government
1.9%
K-12 Education
38.0%
Debt Svc & Other
0.7%
Proposed FY10-11 All Funds Budget
All Operating Funds Spending
$57.648 Billion
General Fund
57.4%
Debt Service Fund
2.5%
Other Spec Rev Funds
/ Transfers
9.5%
Trunk Highway Fund
4.6%
Federal Funds
26.1%
FY08-09 vs. Proposed FY10-11
($ millions)
Gov 10-11
% Chg.
13,797
14,059
1.9
Higher Education
3,099
2,845
(8.2)
Local Aids, Prop. Tax Credits
3,062
2,897
(5.4)
10,328
11,324
9.6
883
114
(87.1)
3,919
3,555
(9.3)
K-12 Education*
Health & Human Services**
Debt Service/Capital Projects***
All Other Omnibus areas
FY 08-09
* For comparability, excludes K-12 shift savings
** For comparability, reflects HHS Combined General and Health Care Access Funds
*** Reduction reflects general fund costs to be paid by tobacco appropriation bonds
Forecast vs. Proposed FY10-11 Budget
($ millions)
Forecast
FY10-11
Governor
FY10-11
% Chg.
13,903
14,059
1.1
Higher Education
3,158
2,845
(9.9)
Property Tax/Local Aids
3,419
2,897
(15.3)
12,627
11,324
(10.3)
Debt Service/Capital Projects***
1,097
114
(89.6)
All Other Omnibus areas
3,620
3,555
(1.8)
K-12 Education*
Health & Human Services**
* For comparability, excludes K-12 shift savings
** For comparability, reflects HHS Combined General and Health Care Access Funds
*** Reduction reflects general fund costs to be paid by tobacco appropriation bonds
Plan Substantially Reduces FY 2012-13 Gap
Forecast
Governor
FY12-13
FY12-13
Revenues
34,558
35,367
Spending
39,162
37,903
$(4,604)
$(2,536)
($ millions)
Projected Gap
Health Care Programs
 Preserve coverage for children
 Obtain better value
 Tie chemical dependency spending to
performance
 Secure better placement process for vulnerable
children through Northstar Care for Children
program
 Strengthen provider standards and controls on
authorization of personal care attendant services
Health Care Programs
 Reduce provider payments
 Hospital payments
 Long term care providers
 Consolidate programs and simplify eligibility
requirements

No more expansions in Health Care Access Fund while
General Fund cannot support existing programs
 Reduce eligibility for parents in Medical Assistance
to 100% Federal Poverty Level
 Maintain limited state safety net program for single
adults
County Services Reform
 Incent counties to consolidate and share services
 Consolidate administered programs to 15 regional
systems
 Improve consistency, service options, and
predictability for participating counties
 Designed to save money and to improve
efficiencies and services
Technology
 Deliver services that the public expects
 Expand
number of licenses available online
 Strengthen and improve state data centers
 Finish building an integrated tax system
 Replace outdated accounting and procurement
system
 Match enterprise IT costs with longer term benefits
Minimal Use of Fees and Revenues
 Minimal fee increases in the General Fund
Tobacco Appropriation Bonds
 Creates nearly $1 billion in one-time funds to
soften revenue shortfall
 Equal to roughly 50% of tobacco payments – little
state risk
 Provides one-time funding for non-operating
obligations
Federal Stimulus Package
 Assumes $920 million in direct state aid
 Understates potential amount, providing a cushion
for the February forecast
 Budget will be updated once federal legislation
known
 Assume new federal money will be spread across
FY09-11
Governor’s Cuts in FY 2009, Proposed
FY 2010-11 Actions Solve the Deficits
($ millions)
FY08-09
FY10-11
$2,245
584
Revenues
32,700
33,638
Spending
34,361
33,611
Cash Flow Acct
350
350
Budget Reserve
0
250
$234
$11
Beginning Balance
Balance
FY 2010-11 Biennial Budget
ALL BUDGET DOCUMENTS
CAN BE FOUND AT
WWW.MMB.STATE.MN.U S