We are wrapping up another week of the 2013 session in St. Paul. Here are a few items of note:
STATE ECONOMY CONTINUES IMPROVING
A supplemental economic report last week showed Minnesota’s state revenue collections continue to surpass previous projections, with $140 million more than expected in January. This is on top of the $2.5 billion in combined surplus revenue shown in the three full reports dating back to November of 2011. We will receive another full report later this month, a key component to shaping our new two-year state budget.
The improvements Republicans made during 2011-12 are working and continue to provide positive economic results. We can balance our budget by simply limiting spending to within the projected 3-percent growth. Instead, the governor proposes $3.7 billion in tax increases that would impact all of us – potentially setting back our economic recovery – in order to fuel more government spending.
TAX CONFORMITY BILL APPROVED
This week, the Minnesota House approved legislation that conforms Minnesota’s individual income tax and corporate franchise tax to most federal changes enacted since April 14, 2011, for the tax year 2012 only. Passing this legislation will prevent many Minnesotans from having to amend their tax returns in the future, and provides middle class tax relief. As Minnesotans have now received their W-2’s and other end of the year tax returns in the mail, it was critical for the Legislature to take quick action so residents would not encounter delays in receiving their tax refund.
MEDICAID EXPANSION APPROVED IN HOUSE
The Minnesota House approved a bill this week that expands the Medical Assistance program in Minnesota. The legislation allows Minnesota to accept $4 billion from the federal government in order to allow 35,000 people to qualify for MA. In addition, the thousands of people who are enrolled in the MinnesotaCare program will likely move to the new federal MA expansion. MinnesotaCare has limits on hospitalization, while the federal program does not. If the federal government chooses to quit funding the program, the State of Minnesota would be forced to pay it in its entirety.
PUBLIC EMPLOYEE CONTRACTS APPROVED
The House this week approved five public employee contracts and two compensation plans, covering approximately 35,000 workers. The contracts grant 2-percent pay increases and step increases for eligible employees (approximately half). All contracts include a continuation of employers covering 100 percent of employee health insurance premium and 85 percent of dependent coverage (premiums estimated to increase 9 percent in 2013). The latest numbers from the seven contracts approved to date – with 11 more contracts to be approved – show a $249 million increase in the 2014-15 all-funds budget.
This plan from the majority gives government workers a 2-percent pay raise just one month after most Minnesotans received a 2-percent reduction in take-home pay. The contracts spend millions more of taxpayer dollars, but fail to include much-needed reform to contain taxpayer costs. Our unfunded liability to the state pension systems has a shortfall of approximately $16.7 billion, yet this issue was not addressed.