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Minnesota Legislature

New Law: Surplus can be used for spending

Published (3/6/2009)
By Lee Ann Schutz
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If Minnesota is to spend federal stimulus money during fiscal years 2010-2011, state law regarding carryover funds needed to be changed.

Sponsored by Rep. Loren Solberg (DFL-Grand Rapids) and Sen. Richard Cohen (DFL-St. Paul), a new law, signed by Gov. Tim Pawlenty March 2 and effective the next day, allows money remaining in the General Fund at the end of fiscal year 2009 to be appropriated in the next biennium.

According to the nonpartisan House Research Department, the stimulus money changes federal Medicaid reimbursement to the state, possibly resulting in a positive General Fund balance at the end of the fiscal year. Federal law prohibits the state from using the Medicaid reimbursement for a budget reserve. This conflicted with state law requiring any surplus to be first used for shoring up the state’s cash flow account, paying back any school funding shifts and funding the reserve account. This account was depleted as part of the governor’s December 2008 unallotment to bring the current biennial budget into balance.

The law also requires a budget enacted for the 2010-2011 biennium to provide for a balanced General Fund budget in fiscal years 2012-2013.

HF886*/SF824/CH5

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