FY2012-13 Budget: Limiting Spending and Achieving Long-Term Reform
Spending FY2012-13:
Forecast: $39 billion
Gov Dayton: $37 billion
Final Agreement: $34.3 billion
Judiciary and Public Safety
Spending:
$1.8 billion General Fund appropriation, $20 million less than the Governor proposed
Resolves a 2009 DFL accounting failure and correctly accounts for a $27 million hole in the Dept of Corrections fund and funds at a level to maintain core services within the courts
Reforms:
Prioritizes the use of state funds on state cases over federal cases
Specifies that funding increases are used to alleviate caseloads and pay for specified operations costs
Prohibits additional funding for increased employee salaries
Requires a co-payment for prison inmate initiated healthcare
Saves counties money through lower reimbursement rates for medical services to local prisoners
Transportation
Spending:
$4.7 billion total appropriation (Dedicated and General Fund) for state and local roads, public safety and transit
$125.7 million General Fund appropriation, $55 million less than the Governor proposed
Cuts spending by $42 million from current levels
Provides over $2.5 billion for jobs related to the construction and maintenance of Minnesota’s trunk highway system
Reforms:
Creates a Trunk Highway Economic Development Account to promote economic development, highway improvement and relieve growing traffic congestion
Improves transit financing and public transparency
Requires development planners to disclose both capital and long-term operating expenses
Taxes
Spending:
$4.1 BILLION in DFL and Gov. Dayton TAX HIKES BLOCKED
$600 million (17 percent) reduction in projected FY2012-13 state aids and credits $750 million (20 percent) reduction in future spending, achieved through permanent long-term spending cuts
Reforms:
Provides $30 million in net tax relief, including estate tax relief for farms and small businesses, sales tax exemption for townships, sales tax exemption for public safety water, and sales tax exemption for resale ticket purchases and freezes city and county aid at 2010 levels, providing budget and funding stability to local officials
Modifies county maintenance of effort (MOE) requirements to allow for greater flexibility and cost savings in delivering local services
Increases homeowner’s property tax refund program and provides more direct property tax relief to middle and lower income homeowners
Includes federal tax conformity to simplify taxpayer filing and tax administration
Replaces the current broken market value homestead credit program and converts it to a comparable exclusion on homeowners’ property tax
Suspends the Political Contribution Program is suspended for two years
Includes federal taxes in the Tax Incidence Study, allowing for a more accurate portrait of the burden on MN taxpayers
K-12 Education
Spending:
$13.6 billion General Fund appropriation, $600 million less than the Governor proposed and $2 billion less than projected FY2012-13 spending
NOTE: An extension and expansion of the education aid “shift” is included in this measure pursuant to an overarching budget agreement between legislative leaders and the governor
o As in the past, existing law provides that the shift will be bought back when the economy recovers and state revenues increase enough to build up a budget surplus
o After taking the effect of the shift into account, the bill appropriates $13.6 billion over FY 2012-13 ($6.3 billion in FY 2012 and $7.3 billion in FY 2013)
$50 increase in per pupil funding allowance
Special education funding increased according to current law growth factors
Reforms:
Seeks mandate relief with the repeal of the contract settlement deadline (January 15) and penalty ($25 per pupil)
Repeals the safe schools levy maintenance of effort restriction (no change to total amount of funding)
Extends by two-years the relief from requiring local districts to spend 2 percent of their basic revenue on staff development
Ends the inefficient and uneven Integration Revenue after FY 2013 to be replaced with a yet undetermined program and spending distribution
Repeals the state’s authority to borrow from school districts with reserves during a fiscal year (the payment shift is different because that splits payments over two different fiscal years)
Increases the Literacy Incentive Aid and investment in the MN Reading Corps.
Requires school districts to “earn” Literacy Incentive Aid funds through student reading test scores in the early elementary grades
Creates Early Graduation Scholarships, allowing academically capable and hard-working students to complete their high school education early and to take the funds to the college of their choice
Requires regular evaluations of principals and teachers: student test scores must be connected with the rating of the teacher
Higher Education
Spending:
$2.57 billion General Fund appropriation, $180 million less than the Governor proposed and
Cuts spending by $246 million from current levels
$21 million increase for the State Grant program to improve and expand choice in higher education
Increases funding for the Work Study program to allow more students to work their way through college
Reforms:
Enacts tuition limitation at MnSCU’s two year institutions, forcing systematic reform and efficiency
Requires the U of MN and MnSCU schools to meet performance benchmarks to receive a portion of their funding
Utilizes need-based State Grant program and Work Study programs to drive expanded choice in higher education, employment opportunities for students, and minimizes student loan debt
Health and Human Services
Spending:
$11.3 billion General Fund appropriation, $700 million less than the Governor proposed and $1 billion less than projected spending
Future spending (tails) reduced from a projected 11.5 percent increase to a significantly lower 4.8 percent increase
No increased surcharges are included in the final agreement
There are no rate reductions to nursing homes in this bill
Reforms:
Bends the curve on health care spending to slow the massive growth in the fastest growing part of the state budget
Creates a defined contribution to privatize public health care for some MinnesotaCare recipients
Controls the number of people allowed on the waiver programs through limits on Elderly and Developmental Disability Waivers
Repeals the provider tax
Provides tax relief from the MinnesotaCare provider tax with a blink-on or off depending on the financial structure of the Health Care Access Fund.
Prevents welfare fraud by strengthening welfare eligibility requirements and placing greater photo ID requirements and restrictions on the use of EBT cards for alcohol or tobacco purchases
Includes County Service Delivery Authority, allowing counties to consolidate human service departments into delivery authorities
Repeals entirely the nursing facility and hospital rebasing, drastically reducing falsely inflated forecasted spending for health and human services
Limits the Medicaid fee-for-service spending for the next 4 years
Increases funding to small, rural nursing homes and rural pharmacies
Modifies MFIP requirements and makes changes for recipients
Accepts the Governor’s Medical Assistance early enrollment program, but also ensures that reforms and cost containment efforts would be done to serve the adults without children below 75 percent FPG
Accepts the Governor’s proposal to ask the federal government for a series of waivers but seeks accompanying reforms:
o Promoting personal responsibility and encouraging and rewarding healthy outcomes, encouraging utilization of high quality, cost effective care through Medicaid and MinnesotaCare enrollee cost sharing
o Redesign home and community based services for people with disability in order to ensure a more sustainable system
o Changes to the Elderly Waiver to improve access to housing, redesign of assessment tools, transition and relocation efforts, refinancing of Alternative Care and Essential Community Supports, and providing Medigap coverage for those not eligible for MA
o Health Care Delivery Demonstration Projects to test alternative payment service and delivery models for Minnesota Health Care Plan fee-for-services recipients and managed care enrollees and support an improved primary care coordination model for recipients
Environment/Energy/Commerce
Spending:
$237 million General Fund appropriation, $39 million less than the Governor proposed
Cuts spending by $75 million from current levels
No fee increases
No tax increases
Reforms:
Provides budget flexibility to maintain outdoors and deal with critical issues such as aquatic invasive species and chronic wasting disease
Requires review of state agency water management to streamline and consolidate among all agencies that have water programs
Reforms state tree nursery program to devise a long-term business plan for sustainability without competing with the private sector
Jobs and Economic Growth
Spending:
$154 million General Fund appropriation, $11 million less than the Governor proposed
Cuts spending by $41.4 million from current levels
Prioritizes spending on private sector jobs and business programs, not earmarks and special interests
Reforms:
Ends DFL practice of pass-through grants and legislative earmarking for special interests
Creates three competitive grants programs in the Department of Employment and Economic Development
Encourages small-business expansion through newly created loan guarantee program
Cuts funding to the MN Trade Office at an ongoing rate of 5 percent per year
Minimizes the use of fees
Agriculture
Spending:
$76.8 million General Fund appropriation, $1 million less than the Governor proposed
Cuts spending by $9.9 million from current levels
Prioritizes spending on the livestock and grain industries, the health and safety of our food supply system, and our ever-increasing export programs
Reforms:
Ends ethanol subsidies by making the final ethanol producer deficiency payment in 2012
State Government Innovations and Veterans
Spending:
$818.9 million General Fund appropriation, $53.6 million less than the Governor proposed
Cuts spending by $68 million from current levels
Reduces funding for constitutional offices, the legislature, and state agencies by 5 percent
Increases spending for Veterans Affairs and Military Affairs by 2.7 and 6 percent respectively
Reforms:
Consolidates Office of Enterprise Technology services throughout government
Requires E-Verify status check to be used by all businesses that contract with the state
Establishes a Sunset Advisory Commission to review state agencies, improve operations, and consolidate programs
Calls for strategic sourcing with private firms to ensure efficiencies in state buildings and vehicle fleet management
Requires the Department of Revenue to seek tax fraud prevention measures and increase delinquent collections
Links state employee pay to performance, with salary increases subject to sufficient ratings
Issues up to $10 million in appropriated bonds through MN Management & Budget in a “pay for performance” pilot project with cost efficient non-profits
