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Don Davis and Danielle Killey, Forum Communications, Published December 29 2012

Minnesotans keep eye on budget

ST. PAUL – Minnesota’s taxpayer-supported budget rose from $638,623 in 1962-63 to $35 billion in the current two-year cycle, and now Minnesotans and a new crop of lawmakers are wondering what the state’s new budget number will be.

Solutions to the state’s budget problems in recent years have featured cuts in some programs and slowing growth in many others. The budget debate has grown sharper the past few years.

“We are still not out of the hole we dug for ourselves in the last couple bienniums,” Democratic Gov. Mark Dayton said. “That is the first reality.”

Legislators and governors who came to the negotiating table with split agendas have done what is known in the Capitol as “kicking the can down the road.” In other words, they used temporary solutions to balance the budget, while not solving it long term.

Whatever the solution in 2013, Dayton insists the state will not resort to “shifts or one-time gimmicks.”

Borrowing money from schools is called a shift, something Dayton opposes and most legislators decry, even as they voted for it through the years.

Among other tactics the governor defines as gimmicks is the Republican plan enacted in 2011 to help end a state government shutdown: borrow money against a tobacco lawsuit settlement windfall the state receives.

As they prepare for the session to begin Jan. 8, state leaders are giving few specifics about what Minnesotans can expect in the next budget.

Most are waiting for Dayton to release his proposal in January, something he is working on almost daily, including weekends. It likely will be revised after a new state revenue report is released by early March.

“We will get our fiscal house in order and see where we go from there,” Dayton said.

The budget could top $37 billion for the two years beginning July 1. That is how much money the state is due to collect from taxpayers under current law. Some Democrats hint at tax increases to provide more money for programs they feel have gone underfunded.

Incoming Senate Majority Leader Tom Bakk, DFL-Cook, agreed with other Democrats when he said many state programs “have been grossly underfunded, like early childhood education.”

He quickly warned: “They are going to have to restrain themselves some. ... The Legislature is most likely going to pass a budget that has further spending reductions.”

Many cuts have come from state health care spending, which is growing faster than other spending. Existing health spending, lower than many health care advocates want, may not be safe.

“I hope we can find additional ways to find savings in that area of the budget,” Bakk said.

Minority view

Democrats do not need the support of Republicans to pass a budget because they control the House, Senate and governor’s office.

Republicans said they would like to continue down the path they took when they were in the majority.

“It’s fair to say we will continue to focus on controlling spending and not adding to revenue,” said Sen. Dave Thompson, R-Lakeville.

He said that Republican approach has been “vindicated” in a lower deficit for the next two years than originally predicted.

The state will start its new budget cycle with no money in the bank and a $1.1 billion deficit in the next budget if nothing is done. But since the constitution does not allow a deficit, Dayton and lawmakers must plug the gap.

One of the reasons state legislators cannot say much about what they will do with the state budget is due to uncertainty about how Washington will deal with federal financial problems.

What happens in Washington affects the Minnesota budget.

“We are doing better, but not good enough,” Sen. Rod Skoe, DFL-Clearbrook, said. “My hope is the federal government will make fiscal stability their priority.”

Down the road

Democrats say lawmakers must look beyond the next two years.

“I think that a good goal for this legislative session is to find a budget that helps to solve some of the long-term structural problems that the state has faced because of imbalance in its budget in the past,” said Assistant Senate Majority Leader-elect Katie Sieben, DFL-Cottage Grove. “We’ve had year after year of rollercoaster swings in our budget. I’m hopeful we can correct that or begin to correct that in this legislative session.”

While doubting Demo-crats’ ability to control spending, Republicans say their example of fiscal restraint should be followed.

“I’d like to see us continue the same type of fiscal restraint we practiced in the last biennium,” said Rep. Steve Drazkowski, R-Mazeppa. “If we are able to continue to practice the type of fiscal responsibility we did the last two years, we’ll stay on a very good trajectory.”

Here is a look at general fund budget growth for Minnesota’s two-year budget over the years:

1962-63: $638,623

1966-67: $959,558

1968-69: $1.4 billion

1970-71: $2 billion

1972-73: $2.8 billion

1976-77: $4.9 billion

1978-79: $6.2 billion

1982-83: $8.3 billion

1986-87: $10.3 billion

1988-89: $11.5 billion

1990-91: $13.6 billion

1996-97: $18.6 billion

1998-99: $21.2 billion

2000-01: $24.2 billion

2002-03: $26.6 billion

2006-07: $31.5 billion

2008-09: $33.9 billion

2010-11: $30 billion

2012-13: $35 billion

• Six months remain in the 2012-13 budget, so that figure is estimated.

• The upcoming Legislature will debate the 2014-15 budget, but current projections say nearly $37 billion of revenue will be available under current law.

• The state general fund receives revenues from major state general taxes such as income and sales and is in the spotlight during budget debates.

• The all-funds budget, projected to be nearly

$64 billion in the next two years, includes the general fund and specialized revenue such as transportation-related taxes.

Source: Minnesota Management and Budget