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NEWS RELEASE

A Compromise Built on Fiscal Restraint and Structural Reform State budget does not raise taxes, reforms health care, education and changes the way state government operates

SAINT PAUL -- (July 19, 2011) -- Republicans in the Minnesota Legislature produced a $34 billion budget compromise to get Minnesota working again. Their solution cuts spending and implements long-term structural reform without raising taxes.

"You can’t control government spending unless you change how it operates," said Speaker of the House Kurt Zellers (R-Maple Grove). "This budget accomplishes what we set out to do: it does not raise taxes, cuts projected spending by $2.5 billion and bends the cost curve of unsustainable state spending. Our economy will be stronger as a result of not increasing taxes on businesses and job creators."

The budget, which was approved in a special session on Tuesday, maintains General Fund spending at $34 billion and reduces projected spending in the next biennium by $2.5 billion dollars. The budget solution did rely on new, one-time revenue that is not included as base level funding for next biennium.

"We made a concerted effort to build-in substantial, real reform measures into our budget package that funds Minnesota state government at appropriate levels. It is crucial that we reform and change the way government operates in order to contain runaway, autopilot spending increases," said Senate Majority Leader Amy Koch (R-Buffalo). "The majority party in the Legislature wants to keep revenue in the economy, which is a big step in the right direction for a state that is in desperate need of a strong economic recovery."

Republicans said the budget is a balanced solution of revenue, spending and structural reforms. The massive reforms in the bill will put Minnesota on a more stable, sustainable fiscal path. Some of the reforms include the phase out of the 2% health care provider tax, property tax relief, estate tax reform, education reform and efficiencies in state government operations.

"This budget represents generational change," said House Majority Leader Matt Dean (R-Dellwood). "We looked at every area of the budget for reform to reduce costs and improve service delivery. We didn’t cut for the sake of cutting but for the preservation of sustainable services that meet the evolving needs of Minnesotans. Our nation-leading reforms, particularly in the area of health care, will serve as a model for other states."

Republicans expressed disappointment in the state government shutdown and acknowledged the length of the shutdown spurred the final budget compromise.

"While the budget agree was not the most ideal to anyone, it was time to compromise, end the shutdown and put Minnesota back to work," said Deputy Majority Leader Geoff Michel (R-Edina).

Highlights of the Fiscal Year 2012-2013 General Fund Budget

Health Care: $11.3 billion
Phase out with complete repeal of the 2.0% MinnesotaCare Provider Tax in 2018.
Defined contribution program to provide a subsidy for adults without children at above 200% federal poverty guidelines in MinnesotaCare to purchase private health care coverage.
Welfare reform that strengthens eligibility requirements and enhanced restrictions to prevent fraudulent use of electronic benefit transfer cards.
Reduce the cost curve in health and human services spending from a projected increase of 22% in the next biennium to 4.8%.

Education: $13.6 billion
$50 added to the per pupil funding formula in each year of the biennium
Special education funding at current level, an 9% increase over the biennium
Teacher and principal evaluation
Repeal of the January 15 negotiation deadline and penalty
Prohibiting the state from tapping into school district reserves for cash flow.

Taxes: $2.9 billion
No income tax increases.
Provided tax incentives for job creation focused on development of data centers.
Increase of $30 million for Property Tax Refund.
Local government aid at FY10 levels for all cities with permanent statutory reductions.
Restored estate tax to allow small businesses and farms to stay in the family.
Market Value Homestead Credit converted to Market Value Homestead Exclusion.

State Government Finance: $818.9 million
Increased spending for Veterans Affairs and Military Affairs by 2.7% and 6% respectively.
Reduced funding for constitutional offices, the legislature, and state agencies by 5%.
Consolidated Office of Enterprise Technology services throughout government
Required E-Verify status check to be used by all businesses that contract with the state
Established a Sunset Advisory Commission to review state agencies, improve operations, and consolidate programs
Linked state employee pay to performance, with salary increases subject to sufficient ratings
Issued up to $10 million in appropriated bonds through MN Management & Budget in a “pay for performance” pilot project with cost efficient non-profits
Audits to verify dependent eligibility in the state employee health insurance program.
Strategic sourcing to ensure efficiencies in government purchasing.
Tax analytic and business intelligence to better collect state taxes and debts.

Higher Education: $2.565 billion
$1.09 billion for the University of Minnesota and $1.09 billion for the Minnesota State Colleges and Universities (MnSCU).
Increase in funding for the state grant program and work study.
Tuition cap of 4% at MnSCU two-year institutions in 2013.

Jobs and Economic Development: $170.3 million
Increased funding used to off set previous reductions to employment and housing programs for the extremely poor, mentally ill and disabled.
Key investments in economic development funds that help Minnesota compete with other states when attracting new businesses.
Workforce Development Competitive Grant Program to achieve accountability and outcomes for state dollars invested in grant programs for business development and adult services.

Judiciary/Public Safety: $1.807 billion
Minimized reductions to core constitutional services like courts, cops and corrections.
Require prison inmate co-pay for inmate-initiated health care visits.
Saves counties money by allowing them to reimburse costs of medical services to local prisoners at the Medical Assistance rate, rather than the negotiated provider rates.
Provide Safe Harbors to juveniles sold into prostitution and sex trafficking by treating them as victims, not criminals.

Transportation: $125.7 million
Funding focuses on preserving current transportation and transit systems.
Improves transit financing and transparency by requiring transit corridor planners to provide the total cost of proposed transit system, including capital and long-term operating expenses.

Environment, Energy and Natural Resources: $252.704 million
Game and Fish bill provisions
NPDES permits required only as directed by federal law
Funded priorities including emerging issues such as aquatic invasive species and chronic waste disease.

Agriculture: $76.601 million
Prioritizes funding to maintain the integrity and safety of the food supply in Minnesota.
No reduction in funding for retail food handling and meatpacking inspections.

Bonding: $497 million
Projects targeted at roads and bridges, infrastructure and flood relief.


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