Committees receive spending targets

Now that a target is known, the real work of the session can begin — setting spending priorities and balancing the budget for the 2010-2011 biennium.

A resolution limiting General Fund expenditures to $30.6 billion over the next fiscal two years was approved March 27 by the House Ways and Means Committee.

Including an expected $816 million from the federal stimulus package to stabilize the budget, total expenditures reflect a 4.9 percent spending increase over the current biennium.

Rep. Loren Solberg (DFL-Grand Rapids), the committee chairman, said the resolution also lays out the plan for a balanced budget for the 2012-2013 biennium, as required by a new law.

“Developing the budget resolution, particularly in this session is extremely difficult,” Solberg said. The spending proposals reflect the input heard during the community meetings on the budget, where he said people understood there are “going to be cuts, and there is going to be revenue increases and there is going to be some shifts.”

The February Forecast projects $30.7 billion in revenue for the 2010-2011 biennium, which the House incorporates into its budget, along with use of $219 million in carryover funds from fiscal year 2009.

Solberg said the House proposal would increase the state’s budget reserve to $250 million; support $350 million for the cash flow account; and would leave an $18.9 million balance on the bottom line at the end of the biennium.

The budget calls for $1.5 billion in new revenue, which will be determined by the House Taxes Committee. In addition, $1.8 billion in payment shifts is also proposed.

With spending targets in hand, the various House finance divisions will begin prioritizing their programming. It was noted that education, from pre-school through higher education, is held harmless in the two biennia. However, other state programming would see cuts of approximately $1.6 billion. A concurrent resolution passed earlier this session requires House and Senate finance divisions to act favorably on omnibus appropriation bills by April 16.

Solberg said committees have flexibility with prioritizing programming, but they will need to stay within their targets. He cautioned that because use of stimulus money is still being clarified, there may need to be target adjustments in the coming weeks.

The governor’s spending plan comes in at approximately $32.4 billion over the biennium. It reflects a 4 percent decrease from the $33.9 billion in General Fund expenditures in the current biennium. It provides for no new taxes, but revenue from the sale of bonds and some payment shifts. The Senate proposes a 7 percent across-the-board spending cut, along with $2 billion in new revenue.