Multi-million dollar spending cut sought in state government finance bill approved

UPDATED AT 10:49 P.M. WITH COMMITTEE ACTION

Commissioner salary reductions, hiring freezes and limited travel and advertising expenses are all part of plan put forth by the House State Government Finance Committee to meet its supplemental budget directive.

Sponsored by Rep. Sarah Anderson (R-Plymouth), the committee chair, HF3168, as amended, was approved on a split-voice vote late Thursday and referred to the House Ways and Means Committee. It calls for a $9.5 million spending reduction.

A companion, SF2532, sponsored by Sen. Tom Saxhaug (DFL-Grand Rapids), awaits action by the Senate State and Local Government Committee. Senate targets released Wednesday call for a $30 million increase in state department and veterans spending.

“In a non-budget year, it’s a good chance for us to look at how we can make government more efficient,” Anderson said.

DFL members — none of whom voted for the delete-all amendment during a roll-call vote — didn’t agree.

A note guards the amendments to HF3168, the omnibus state government finance bill, April 14. The committee is scheduled to reconvene after Thursday's House Floor session to debate amendments and vote on the bill. Photo by Paul Battaglia

“Cutting during a time of surplus doesn’t make any sense,” said Rep. Sheldon Johnson (DFL-St. Paul).

Appropriations to executive agencies, including constitutional offices, would be reduced by a combined $6.52 million. To the “greatest extent possible,” reductions would come from 5 percent salary reductions for commissioners, deputy commissioners and assistant commissioners; a hiring freeze; and reduction in nonessential travel and advertising expenses. These changes would be reflected as reductions in base budgets for the 2018-19 biennium.

Five departments would not take a hit: Corrections, Human Services, Military Affairs, Public Safety and Veterans Affairs.

Gov. Mark Dayton raised commissioner salaries by an average of about $20,000 last July 1 to between $144,991 and $154,992 annually. One day later the governor lost his power to provide such raises without legislative consent.

WATCH Committee discussion of the bill on YouTube

The hiring freeze would prohibit state employers — not including the Minnesota State Colleges and Universities system — from hiring permanent or temporary employees before July 1, 2017, with exceptions carved out for a work-study position or a position “necessary to perform essential government services.”

An executive branch agency’s promotional and advertising spending in the next fiscal year that begins July 1, 2016, could not exceed 90 percent of what is being spent in the current biennium. This would not apply to the state lottery or Explore Minnesota Tourism.

The bill would limit the number of full-time equivalent employees in executive branch agencies to 35,927. Anderson indicated numbers for this year’s second quarter put that figure at more than 36,600.

Myron Frans, the commissioner of Minnesota Management & Budget, said the bill is counterproductive to providing the necessary services that Minnesotans expect, and that the governor said specific budget cuts should be named rather than just calling for general reductions.

Rep. Jim Nash (R-Waconia) disagreed, saying the bill puts those decisions in the hands of the management teams.

More funding changes

The other $3.14 million needed to reach the budget cut target would come from an 80 percent reduction in the Senate carryforward account.

In order to help new funding priorities elsewhere, another $2.67 million would be gained from a suspension of the public subsidy program under which people can check a box on their tax return to have $5 go to help candidates for state office pay campaign expenses.

MORE: View the supplemental budget spreadsheet

Prior to Fiscal Year 2014, the Audit Practice Division of the Office of the State Auditor was primarily funded by a General Fund appropriation with fees collected for auditing services, such as those done on local units of government, deposited in the General Fund as non-dedicated receipts. Since then, those funds have gone into the State Auditor’s Enterprise Fund to pay for related auditing service costs.

The bill calls for the elimination of the enterprise fund, with its balance going into the General Fund. Future division service payments would go to the General Fund, from where the division would again be funded. Next year’s anticipated receipts total $6.95 million.

The Department of Human Rights would be directed to deposit any federal funds it receives for the remainder of this biennium to the General Fund; however, if that were to violate federal agreements, the General Fund appropriation to the department would be reduced by the amount of the incoming federal funds.

Additionally, $1 million previously allocated to MMB for Fiscal Year 2017 must be used “to identify and reject attempted tax refund fraud.”

Other funding in the bill includes:

• $500,000 in a onetime appropriation for MN.IT Services to perform a study of enhanced cyber security across state government;
• $318,000 for the Office of Legislative Auditor to prepare fiscal notes, revenue estimates and local government impact notes on pending legislation. MMB would have a matching deduction;  
• $300,000 for the state soldiers assistance fund for housing and health assistance;
• $148,000 for the Department of Administration’s continued implementation of the state’s Olmstead Plan which helps Minnesotans with a disability enjoy life to its fullest;
• $100,000 for the Eagles Healing Nest in Sauk Centre to assist veterans reintegrating back into civilian and family life; and
• $100,000 to help provide rent subsidies for veterans housing at the Cottages of Anoka.

Policy provisions incorporated

Although termed a finance bill, the proposal includes a number of policy provisions relating to monetary issues, including:

• having the Department of Administration maintain a list of new agency projects estimated to cost more than $100,000 and are funded from the General Fund;
• MMB would need to report annually to the Legislature on federal funds received by the state, including totals received in the prior fiscal year and totals anticipated in the current fiscal year;
• amending the state’s definition of “killed in the line of duty” to match that used for the federal Hometown Heroes Act for purposes of awarding benefits to survivors of a public safety officer killed in the line of duty;
• amending the process for removing a veteran from government employment under the Veterans Preference Act, including granting a veteran the right to have his challenge heard by a three-person board even if the veteran’s employer has a civil service board or commission or merit system authority;
• increasing the limit on required payments to owners of manufactured homes required to relocate their homes due to their home park being put to another use, closed or ceasing to be used as a manufactured home park;
• prohibiting a state agency from proposing a fee or fine increase of more than 10 percent in a biennium over the same fee or fine in law at the biennium’s start;
• establishing a legislative surrogacy commission to develop recommendations on public policy and laws regarding surrogacy;
• prohibiting state agencies from charging a General Fund state grant recipient a fee for administrative expenses incurred by the agency in administering the grant; and
• MMB would need to notify the Office of the Legislative Auditor within 10 days of any purchase or sale of state-issued bonds the commissioner believes could be a potential federal violation. Payment of a penalty would come from the MMB operating budget and require notification to the legislative auditor and legislative leaders once a fine is paid. A quintet of bond sale violations in 2010 and 2011 resulted in MMB paying a $537,025 penalty to the Internal Revenue Service last September.

What’s in the bill?

The following are selected bills that have been incorporated in part or in whole into the omnibus state government finance bill:

• HF437 (Scott)
• HF495 (Anderson, S.)
• HF1281 (Daudt)
• HF2232 (Miller)
• HF2468 (Anderson, M.)
• HF2565 (Newton)
• HF2810 (Howe)
• HF2825 (Wills)
• HF2915 (Albright)
• HF3001 (Loonan)
• HF3416 (Howe)