The first and only law passed during the Legislature's brief 2010 special session brings the state's budget into balance.
Sponsored by Rep. Lyndon Carlson (DFL-Crystal) and Sen. Richard Cohen (DFL-St. Paul), the law erases a projected $3 billion shortfall through spending cuts and payment delays. It ratifies many of Gov. Tim Pawlenty's 2009 spending unallotments — with a few changes — and makes some additional health and human services cuts.
A key policy provision will allow Pawlenty and the next governor to choose whether to opt Minnesota in to an early expansion of Medicaid. Other provisions will help manage the state's cash flow by authorizing delayed sales and corporate tax refunds, and requiring some businesses to pay their sales taxes early.
Budget reductions enacted in the law, either through program cuts or payment delays, include:
Below is a summary of key provisions. A full, detailed spreadsheet is available online from the nonpartisan House Fiscal Analys Department.
(Click here.) In addition, the nonpartisan House Research Department has a section-by-section summary of each provision in the law.
(Click here.)
The law has various effective dates.
SSHF1*/SSSF1/CH1
K-12 education funding changes
A $1.8 billion delay in payments to K-12 school districts that Pawlenty made unilaterally is ratified by the law, but with some modifications. Effective retroactively from July 1, 2009, nearly $1.4 billion in school aid payments are delayed over the course of the 2010-11 biennium. Schools are put on a 70/30 aid repayment schedule for fiscal year 2011, meaning that 30 percent of the aid payments are deferred until fiscal year 2012. The delayed payments will begin to be repaid in fiscal year 2012 — a key difference between the law and Pawlenty's original unallotments. (Art. 3, Secs. 4, 6)
Schools in statutory operating debt may continue to be paid on the usual 90/10 payment schedule in the current fiscal biennium.
(Art. 3, Sec. 8)
Also included in the law is a provision that ratifies the governor's 2009 executive action to force school districts to recognize their property tax receipts early. The so-called "property tax recognition shift"; will save the state $576
million in fiscal year 2011. It is effective retroactively from July 1, 2009. (Art. 3, Sec. 2)
Effective July 1, 2010, the law modifies a statute that previously required the state to withhold payments to school districts to reduce the need for short-term borrowing. Under the provisions, Minnesota Management & Budget may withhold school aid payments in those circumstances. The law also raises the levels of cash reserves school districts must have on hand before the state can begin withholding payments from them. (Art. 2, Sec. 1)
Early tax payments required, refunds delayed
Beginning Sept. 1, 2010, businesses owing $120,000 or more per year in sales tax revenues are required temporarily to prepay
some of their taxes, under the law.
To help manage the state's monthly cash flow, businesses will pay a portion of their tax liability early. A business may choose either an amount equal to at least two-thirds of their month's tax liability to the state by the 20th day of the month in which the tax liability occurs; or 90 percent of the month's liability by the 14th of the month following the month in which the liability occurs. In both cases, payment of the remaining liability is due the 20th of the month after the liability is incurred. The accelerated sales tax payment schedule will be suspended once the state's cash flow and budget reserve accounts are sufficiently replenished. Penalties are provided for those who do not meet their prepayment obligations. (Art. 2, Secs. 4-5)
The law also directs the Revenue Department to delay refunds for overpayment of sales and corporate taxes. This includes capital equipment refunds. The result will be to push $152 million in refunds that would otherwise have been paid in fiscal year 2011 into the next fiscal biennium. The provision takes effect July 1, 2010.
The state also requires counties to pay the state property taxes collected by the county on the same accelerated scheduled used to make property tax payments to school districts. (Art. 13, Sec. 6)
Local government aid, tax credits
The law cuts a variety of tax aids and credits — again, ratifying the governor's unallotments. More than $299 million is cut from local government aid. Some small counties, cities and townships are exempted from the cuts. (Art. 13, Sec. 2)
In addition to the LGA cuts, the law includes:
Health care — reimbursement to providers, plans
The law makes several changes to the state payments that providers and health plans receive for the cost of treating people in state health care programs.
Effective July 1, 2010, payment rates for certain physician and professional services will be reduced by 7 percent, with the exception of primary care, preventative medicine and family planning services, among others. The law delays the rebasing of hospital operating payment rates until 2013, except for long-term care hospitals. In addition, payments to hospitals for
inpatient services will be cut by 1.96 percent beginning July 1, 2011 (Art. 16, Secs. 2-3, 25).
The law also includes some payment withholds designed to incentivize plans and providers to reduce costs. One provision withholds some of the reimbursement to managed care plans for emergency room services, with the payment returned later if the plan reduces its emergency room utilization rate (Art. 16, Sec.
21).
Health care — reform
The law creates opportunities for Minnesota to participate in health care reform initiatives under the federal Patient Protection and Affordable Care Act.
It gives Pawlenty and his successor the option to expand eligibility criteria for participation in Medical Assistance,
the state's Medicaid program. Under the change, certain childless adults between the ages of 21 and 64 with incomes up to 75 percent of federal poverty guidelines may enroll in Medical Assistance. The change may be implemented only if directed by the governor by Jan. 15, 2011 (Art. 16, Secs. 5-7, 48).
The law also directs the governor to convene a task force that will advise and assist state leaders regarding the implementation of federal health care reform legislation. A preliminary report to the Legislature is due by Dec. 15, 2010
(Art. 22, Sec. 4).
In addition, the human services commissioner must develop and authorize new models of health care service delivery and apply for grants to participate in federal health care reform demonstration projects (Art. 16, Sec. 19; Art. 22, Secs. 2-3).
Health care — miscellaneous
The law appropriates funding to several State Operated Services facilities that the Department of Human Services had proposed to close. In some cases, the funding is to be used to develop community-based services that will replace a state-operated
facility. The law establishes a task force to make recommendations to the DHS commissioner and the Legislature about how people with complex needs, such as mental illness and developmental disabilities, may receive appropriate, cost-efficient services. The task force must also recommend how services currently provided to patients at the Anoka-Metro Regional Treatment Center may be provided through community-based partnerships (Art. 19, Secs. 4, 18).
The law also directs the DHS commissioner to notify the Legislature regarding the redesign, closure or relocation of state-operated programs. The closure of a facility requires legislative approval if DHS and employee bargaining units cannot agree on how to transfer affected employees to other state jobs. The State Operated Services sections have various effective dates. (Art. 19, Secs. 5-6)
The law removes a state-imposed asset limit for participation in the federal Supplemental Nutrition Assistance Program, formerly food stamps. To be eligible, a household must demonstrate that its gross income is equal to or less than 165 percent of federal poverty guidelines for its family size. This section takes effect Nov. 1, 2010 (Art. 18, Sec. 1).
The law establishes licensing standards for birth centers and specifies that no birth center may operate without a license as of Jan. 1, 2011. It sets licensing fees, describes application requirements and outlines procedures for obtaining temporary licensure. The law also specifies Medical Assistance coverage of services provided by licensed birth centers (Art. 16, Sec. 15; Art. 20, Sec. 14).
The law also makes changes to the modified General Assistance Medical Care, a state program that covers basic medical services for low-income adults. The law extends until Feb. 28, 2011, the period of time that hospitals serving GAMC patients who choose not to participate in a "coordinated care delivery system," a new care model that is established by another new law, CH200. (Art. 16, Sec. 40).
New Laws prior to 2005 are posted as Portable Document Format (PDF) files. To view PDF files, you will need the free Adobe Acrobat Reader. Adobe also provides free
accessibility tools for screen reader access.