In early December, state economists warned lawmakers the state would be facing a $6.2 billion budget deficit for the upcoming budget cycle. In years past, legislative leadership would have waited until late March to begin thinking about addressing this problem. I’m pleased to report that legislative Republicans have already unveiled the first step towards balancing the state’s budget.
On January 18, Minnesota House and Senate Republicans introduced an early action budget bill that takes immediate steps to reduce the budget deficit by $1 billion. The bill reduces spending for state agencies by $200 million in the current budget while making other one-time spending cuts permanent, reducing the long-term deficit by another $840 million.
The first phase of the budget balancing plan includes a provision that I have led on, cancelling the return of the Political Contribution Refund program that uses tax money to refund political contributions up to $50 for individuals and $100 for couples, saving $11.8 million. Republicans included a provision to keep the K-12 general education formula, special education funding and further reductions to higher education off-limits from the $200 million reduction. Constitutional offices and the Legislature will also see a reduction to their current budgets.
The legislation holds Local Government Aid at the current level of $426.4 million, which is the level many local governments expected when setting their budgets. Also worth noting: Market Value Homestead Credit funding will increase by $20 million thru 2013 under this proposal. The Market Value Homestead Credit is a direct benefit to homeowners to reduce their property taxes by having the state pay a portion of the homeowner’s property tax liability directly to the taxing district.
Finally, in the current budget that ends June 30, 2011, the bill gives the Minnesota Management and Budget commissioner the directive to reduce state agency spending by $200 million to prevent a “Christmas in June” for agencies that spend excess money in order to protect their total level of funding.
There’s no reason to delay the inevitable. We know we face a budget crisis, so there’s no reason why we can’t get the ball rolling and whittle some of this deficit away as quickly as possible. Many of these cuts were enacted by the Democrat-controlled legislature last year – but only on a one time basis. Now that we are proposing that their cuts for the next biennium, I am hopeful they will continue to be in favor of these reductions and we can send a strong, bipartisan message to Minnesotans that our spend-first, ask questions later way of budgeting is coming to an end.