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After an unnecessary 20 day state government shutdown, we passed our final budget agreement with Governor Dayton early Wednesday morning. As with any negotiation, the result is a mixed bag. In spite of the short term concessions to the Governor, we were able to accomplish significant longer term gains. For that reason, I voted for the final budget bills, but voted against the bonding and pension bills.
With a Democrat Governor and a Republican majority, compromise was necessary to bring the needed changes to our state. This means that neither side achieved all of what they wanted. However, as an opponent of high taxes and advocate of reform, I am pleased that the final budget was reached without tax increases, and with many innovative initiatives to reduce costs and modernize state services for the future (see highlights below).
I remain steadfast and committed to controlling spending in our state government and these reforms will help us achieve that goal.
By the numbers, the 2012-13 budget spends $34 billion in General Fund dollars. The Governor's initial budget was at $37 billion. That means, we reduced projected spending increases by $2.5 billion and have turned state government on a more sustainable trajectory. Beyond the numbers, the 2012-13 budget contains many important policy initiatives that bring much-needed reform to state government.
Facing a historic deficit and a Governor committed to raising taxes, we can be proud of achieving a major victory to balance the budget without allowing tax increases. Looking to the future, our reforms set Minnesota on a positive track to better handle fiscal ups-and-downs, and become more stable, sustainable and strong.
It is a privilege to serve our community, and I will continue to advocate policy that brings responsibility to government and jobs to Minnesota. Throughout the legislative interim, I welcome your continued feedback and involvement. There is still work to be done and progress to be achieved. We can and we will control state spending, change the way government does business and advance Minnesota for a stronger future.
Highlights of the Fiscal Year 2012-2013 General Fund Budget
· No income tax increases
· 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
· Requires federal taxes be included in the tax incidence study
State Government Finance
· Reduced funding for constitutional offices, the legislature, and state agencies by 5%-15%
· IT consolidation throughout state government
· 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
· Increased spending for Veterans Affairs and Military Affairs by 2.7% and 6% respectively
· Bent the cost curve: HHS projected spending increase 22% in future biennium; now grows 4.8%
· Repeals the 2% Provider Tax: phase out with complete elimination in within 7 years
· Healthy Minnesota – New voucher program allows highest-income enrollees to purchase private insurance
· Zero-based rebasing for hospitals and nursing homes
· County Service Delivery Authorities to consolidate county human services departments
· Increase funding for small rural nursing homes and pharmacies
· General Assistance Eligibility Changes
· EBT Reforms
· Requires the recipient’s name be on their EBT card
· Prohibits purchasing alcohol and tobacco
· Fraudulent use will result in the card-holder losing benefits
· MFIP Eligibility Changes
· Caps owned vehicle value at $10,000
· Prohibits political campaign work from counting toward work requirements
· $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
· Integration funding sunset in 2013; a commission will be convened with legislative and executive appointments to decide how to take the money used in this program and better spend it to improve student performance
· Teacher evaluation – requires local districts and state to develop teacher evaluation plans. 35% of a teacher’s evaluation must be based on annual student growth.
· Principal evaluation
· January 15 negotiated penalty and deadline repeal
· Special education funding at current level, an 9% increase over the biennium
· 2% staff development set aside repealed for two years
· Maintenance on safe schools levy permanently repealed – this provision meant that a school could never reduce the number of counselors that it employed. Created super-tenure for school counselors and support staff
· Small schools revenue for small rural schools – creates equity in the funding formula for school districts with less than 1000 pupils.
· Compensatory pilot grants help suburban large school districts w/ compensatory equity
· Early education scholarships at $4 million (there is no quality rating system) – Scholarships for pre-K will be directed to needy families
· Delinked increases in the formula – previously spending more money on the general education formula meant that other categorical aids must increase as well. This allows future legislatures to put money on the formula without having to increase other spending as well.
· Additional funding for literacy - rewards districts based on student growth and proficiency in 3rd grade reading test scores
· 3rd grade reading reforms (does not include social promotion language)
· MMB not allowed to steal from school district reserves for cash flow
· Accelerate payments to charter schools to allow them to get more of their funding in June
· Increased in funding for the state grant program and work study
· Tuition cap of 4% at MnSCU two-year institutions in 2013
· Performance Benchmarks
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
· Minimized reductions to core constitutional services like courts, cops and corrections.
· Require prison inmate co-pay for inmate-initiated health care visits
· Saving 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
· 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
· Funded priorities including emerging issues such as aquatic invasive species and chronic waste disease
· Streamline water programs within state agencies
· Reforms state tree nurseries and takes them out of competition with the private sector
· 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
· Eliminates state subsidies for ethanol going forward after FY12.
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