We have about a month remaining in the 2010 legislative session and I want to pass along a recap of what's transpired so far. Notable events include reworking the General Assistance Medical Care program, passage of a jobs/taxes bill, and the adoption of a bonding bill to fund construction projects. Work continues in balancing the budget.
Here's a rundown:
JOBS/TAXES BILL PASSES
The Legislature passed the jobs/taxes bill last week before members headed home for Easter break. The bill includes an "angel" tax credit to encourage investment in start-up companies to create jobs. It also provides jobs through promoting historic building renovations, Mall of America expansion and incentive for the Ford plant to continue operating in St. Paul.
These various programs/credits are paid for by repealing the state's $25 motor fuels tax credit. This tax credit cost a lot to administer and was even available to people who never bought gas or drove. Savings from the elimination would be approximately $30.1 million.
This bill was not perfect, but it passed by a wide margin and is a step in the right direction. We attempted to make across-the-board reductions in the corporate tax - which is among nation's highest - but that amendment was denied.
BALANCING THE BUDGET, PART I
The Legislature also on Monday re-passed the first step in the majority's three-phase plan to erase a state deficit of $994 million. The first phase includes $312 million in cuts to areas including local governments, public colleges and agriculture programs. The largest cut is a $105 million reduction in Local Government Aid. The conference committee stripped the zero-based budget amendment we had successfully added the first time the bill was on the floor. That disappoints me because it was the only true reform in this legislation and removing that component left us with some outdated, inefficient methods that contribute to our budget troubles.
I anticipate Health and Human Services and K-12 education areas will be addressed in the next two phases of budget cuts; they comprise approximately 70 percent of the state's budget. An influx of more than $400 million from the federal government could be announced soon, which would leave us with a much smaller deficit to fill.
IMPROVING HEALTH CARE DELIVERY FOR THE POOR
Another top item the first half of the session was our re-working of the GAMC program for low-income Minnesotans. GAMC was in serious need of an overhaul since it had become unaffordable with expected growth of 30 percent per biennium to become $1.3 billion by 2014-15. We found a solution for replacing GAMC with a more efficient system that will continue providing care for those in need, but taxpayers will save more than $700 million per two-year cycle.
If we had not upheld the governor's veto of an unfunded, temporary "Band-Aid" bill, we would not have achieved this bi-partisan improvement of GAMC. We stayed the course even though some legislators abandoned reform and told us there were no alternatives. It's not always a pretty process, but persistence paid off and the finished product will benefit all of us.
SHRUNKEN BONDING BILL APPROVED
The last big news-maker from the first half was the bonding bill, which borrows money to fund construction projects. Cooperation and compromise was more difficult to attain in this bill and the process became very contentious. A significant amount of disagreement surrounded the bill's size. The majority pushed for a borrowing bill in the $1 billion-plus range, but the governor recommended a more priorities-based bill of around $700 million. The final bill was passed to the governor's desk with a total of $996 million in various projects. He line-item vetoed many of the extras - like a sculpture garden - and then approved the top priorities, bringing the final cost to $680 million.
Although the bonding bill contained many projects of merit, government borrowing is not the cure-all for creating job growth and economic recovery. Long-term economic growth and stability will come from Minnesota's job creators and innovative citizens.
Please continue providing me with your input as we make our way through the second half of the 2010 session.