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Minnesota Legislature

Too much reform?

Published (7/15/2011)
By Nick Busse
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One of the session’s major omnibus bills included sweeping state government reforms that went too far in the eyes of Gov. Mark Dayton, who vetoed the measure.

Sponsored by Rep. Morrie Lanning (R-Moorhead) and Sen. Mike Parry (R-Waseca), the first omnibus state government finance bill would have slashed General Fund spending by more than one-third on core state government operations. It also proposed reducing the state workforce by 15 percent over four years and cutting

$90 million from employer contributions to the state employees’ health insurance program.

HF577/ SF1047*/CH40

Shared commitment to efficiency

In his veto message, Dayton said he shared lawmakers’ commitment to more efficient, streamlined government services; however, he said the bill was too aggressive in cutting agencies’ budgets and staff complements.

“Such extreme reductions to agency operations would jeopardize core government functions and substantially impair the state workforce,” he wrote.

Overall, the bill would have provided funding for core state government operations and veterans programs for the 2012-2013 biennium. Affected agencies included Minnesota Management & Budget as well as the departments of Revenue, Administration, Veterans Affairs and Military Affairs. Funding for the Legislature and the state’s constitutional offices was also provided in the bill, along with many smaller state agencies and quasi-state agencies (i.e. the Minnesota Historical Society).

It proposed a total of $600.3 million in General Fund spending — a 34.2 percent reduction from the projected base. In general, most agencies would have received a 5 percent to 15 percent operating budget reduction. Only two agencies — the departments of Veterans and Military Affairs — would have had their funding increased, under the provisions.

Dayton said the reductions would make many of the proposed reforms difficult to implement. As an example, he cited MMB, which would have its budget cut by

10 percent while being asked to implement zero-based budgeting, an employee gain-sharing program and other reforms — all while simultaneously reducing the number of agency staff.

“This bill makes substantial reductions in operating funding even as it establishes multiple, new requirements for state agencies,” Dayton wrote.

The governor also criticized the bill for booking new General Fund revenues from proposed tax analytics and federal offset programs. He said the bill recognized $169 million in new revenue from these initiatives that Department of Revenue analysts “cannot substantiate.”

Reshaping state government

Though the bill’s funding provisions did not touch all state government agencies, many of its policy provisions would have. Among these were many proposals to fundamentally reshape state government.

The bill would have impacted the state’s workforce in a number of ways. The 15 percent reduction in the state’s workforce would have been required by June 30, 2015. Rather than an across-the-board cut across all state agencies, Dayton and his administration would have been authorized to distribute the reduction among the agencies however they saw fit, using attrition, layoffs, furloughs and a hiring freeze.

A salary freeze would have been required for all state employees until at least June 30, 2013. This provision, and another requiring that the State Employee Group Insurance Program find $90 million in General Fund savings by making state workers pay a larger share of their health insurance costs, were criticized in Dayton’s veto letter. He said the provisions undermined the collective bargaining process by setting statutory goals for labor contracts.

The bill would have established a Sunset Advisory Commission to explore opportunities to eliminate, combine or reorganize state agencies. A rotating 12-year schedule would have been established for the commission to review each agency. Following the review, the agencies would expire unless lawmakers took action to continue their existence.

State budget officials would have been required to phase in the use of zero-based budgeting, under the bill’s provisions. Agencies would have been required to present lawmakers with detailed budgets including multiple alternative funding levels and performance data for each individual program being funded.

The Office of Enterprise Technology would have assumed control of all of the state’s information technology operations, procurement and staff. The goal was to save money, streamline services and improve the security and stability of critical IT infrastructure.

Selected other reform initiatives in the bill included:

• cutting the number of deputy and assistant commissioners at state agencies;

• requiring the Department of Administration to issue requests for proposals for vehicle fleet consolidation, building efficiency improvements and strategic sourcing;

• allowing cities of the first class and all counties to contract with private accounting firms instead of the Office of the State Auditor to do their audits;

• loosening restrictions on outsourcing state services to private contractors; and

• establishing a performance appraisal and performance pay system for state employees.

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