Apply for a two-year state policy fellowship with the Minnesota Budget Project

To expand the diversity of voices that speak with authority in state policy debates, the Center on Budget and Policy Priorities (CBPP) has developed a State Policy Fellowship that places fellows in two-year, paid positions in influential state-based policy organizations, including the Minnesota Budget Project.

The fellowship program seeks highly motivated candidates – with particular attention to candidates having experience with communities that are underrepresented in state policy debates – with a demonstrated interest in working on public policies that affect low-income communities and have implications for racial equity. A graduate degree in public policy, law, social work, economics, or a similar field is required.

The Minnesota Budget Project policy fellow will have an opportunity to work on advancing policies to make economic opportunity and prosperity available to all Minnesotans, regardless of who they are or where they live. The fellow will develop expertise in state budget issues and tax policies, collaborate with community-based advocates, and produce analyses that advance and build support for policy recommendations.

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Fellows will also participate in a career development program, including an orientation and two policy conferences in Washington, D.C.

Fellows will earn $50,000 per year, plus the Minnesota Budget Project offers great benefits.

Applications, submitted through the CBPP, are due February 10. More information and the link to apply can be found here.

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Minnesota’s January economic update shows reason for caution

The recently released January Revenue and Economic Update gave us unsettling news about the state’s economic and budget landscape. The quarterly report from Minnesota Management and Budget (MMB) shows that recent state revenues have come in lower than anticipated. It also reports that the national economy is expected to continue to grow, but that growth will become quite slow. These two factors could be a potential warning that the $1.5 billion state budget surplus projected in the November Forecast may be too optimistic.

Some of the top takeaways from the Update include:

1. State revenues for the most recent quarter came in below projections. The state’s revenues for November and December came in $102 million below projections; that’s 2.7 percent less than projected in the November 2018 Economic Forecast. The decrease is largely due to lower-than-expected income taxes received. When the January revenues are in, MMB will have a better idea whether this is just a timing issue or an indicator of a more significant trend.

2. Economic growth is expected to be lower. The national economic forecasters predict weaker national GDP growth for 2019 and beyond. The January update predicts 2.5 percent growth in 2019, down from the 2.7 percent predicted in November. Growth is then expected to slow to 1.4 percent by 2023. The slower growth is due to several factors, including tariffs between the U.S. and China and a strong U.S. dollar.

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3. The Update does not include the impact of the current federal government shutdown. The economic outlook calculations were done before the shutdown began, and so does not include the impact. However, the state’s economic forecasters expect that this shutdown will place a further drag on national economic growth.

4. National unemployment rate remains low. Nationally, unemployment was 3.9 percent in December, up slightly from November. The Update explains, however, that this slight increase is primarily due to more people who didn’t have a job now feeling confident enough to start looking for one. Since they’re actively looking for jobs but not yet employed, they’re now included in the unemployment numbers.

5. Forecasters are fairly confident in their projections. The forecasters assign a 60 percent chance that their baseline economic forecast is correct. They also give a 25 percent chance for a more pessimistic scenario in which there’s a recession starting next year, and assign a 15 percent probability to a more optimistic scenario.

We’ll get a more complete look at the state’s economic health when the February Forecast comes out later next month. But if we see similar economic growth projections in the February Forecast, that will likely mean lower revenues coming in, and policymakers will have fewer resources to work with as they build the FY 2020-21 budget.

With such slow projected economic growth, the national economy is less resilient, and any sudden shocks to the economy could turn into a recession. It points to the importance of continuing to make investments that support Minnesotans striving to make ends meet. It also underlines why they should protect funding sources for services that Minnesotans count on, including by maintaining the provider tax, a major funding source for affordable health care that will expire on January 1, 2020, if policymakers don’t act.

-Clark Goldenrod

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Investments in healthy people, healthy communities at stake this session with fate of provider tax

Funding for affordable health care for one million Minnesotans is at risk in the 2019 Legislative session because the health care provider tax is set to expire on January 1, 2020. Provider tax revenues are the primary source of funding for the Health Care Access Fund (HCAF), which goes toward investments in Minnesotans’ health and well-being.

The Minnesota Legislature created the provider tax in 1992 to fund a bipartisan health care reform package aimed at more Minnesotans getting health care coverage. The provider tax primarily supports affordable health care through MinnesotaCare and Medicaid, and other public health priorities. But due to a deal struck in 2011 to pass the state budget and end a 19-day state government shutdown, the provider tax will sunset at the end of this year unless policymakers act to maintain it. Allowing the provider tax to expire would result in about a $700 million annual loss in dedicated funding for health care in Minnesota.

Policymakers can’t afford to hit the snooze button this session on extending the provider tax:

  1. One in five Minnesotans have better access to a doctor when they’re sick thanks to Medicaid and MinnesotaCare, which are funded in part by the provider tax. These include working Minnesotans who don’t have affordable insurance through their employers, seniors, and Minnesotans living with disabilities.
  2. The positive balance in the Health Care Access Fund won’t last long without the provider tax. While it’s true that the HCAF currently has a projected surplus of $591 million for FY 2020, that’s largely due to positive balances carried over from previous years. And that balance is being spent down each year as it is used to help fund Minnesotans’ health care needs. The November forecast shows that by FY 2023, the Health Care Access Fund will have a deficit of almost $1 billion if the provider tax is allowed to expire.
  3. Allowing the provider tax to expire would put pressure on the state’s general fund, and this could have serious consequences for other public services that Minnesotans value. Losing close to $700 million annually in funding for the health of Minnesotans could constrain other investments in areas like K-12 education, financial aid for college students, and statewide access to broadband.

In the 2019 Legislative Session, Minnesota policymakers must act to extend the provider tax in order to preserve health care for over one million Minnesotans and keep moving us forward toward becoming a state where good health is available to all.

To learn more about why the provider tax is so important, check out our new analysis.

-Clark Goldenrod

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Good session to you! Let’s make racial equity a key focus this year

It’s that time of year again. The 2019 Legislative Session is beginning, so the Minnesota Budget Project team is getting out our calculators to crunch all the numbers, and our magnifying glasses to read those huge budget spreadsheets in size 8 font.

This year will be a budget year – meaning that policymakers’ primary task will be to craft the state’s next two-year budget. And as they do so, we urge them to make advancing racial equity a primary goal in their decision-making. This will mean deliberately addressing the structural barriers that block Black, Indigenous, and people of color (BIPOC) from thriving in today’s economy.

(Primarily white) Minnesotans often brag about Minnesota’s overall economic success, as demonstrated by the state’s low unemployment rate, high median income, and high rates of health coverage. And we’ve done it too. But these statistics often ignore that many Minnesotans of color face systemic barriers that make it harder to get ahead. And a legacy of discriminatory policies in housing, education, and elsewhere mean that people of color in this state face gaps in opportunity.

For example, due to discriminatory housing policies that were put in place over the past century, BIPOC communities are far more likely to live in areas of concentrated poverty where access to building blocks of opportunity, such as good schools and jobs, are limited. This means that BIPOC Minnesotans are more likely than their white counterparts to earn lower incomes, face poor health outcomes, or be subject to over-policing.

Policymakers should commit this session to make serious advances toward racial equity in our state and close these gaps in opportunity, in areas such as:

  • Economic equity. All Minnesotans should have the opportunity to succeed. This could involve investments in public transportation and allowing access to driver’s licenses regardless of immigration status, so that working people can get to their jobs safely and reliably. It could also include improving the state’s Working Family Tax Credit to boost working people’s wages and get children off to a stronger start.
  • Criminal justice. Minnesota needs a more just and equitable system. This could mean restoring voting rights for individuals who were formerly incarcerated, and addressing the debt trap that some face when they’re subjected to fees and fines from things like traffic tickets.
  • Health equity. There’s a lot of work to do to make progress in this area, but it will also be important to make sure that policymakers don’t take a step backward as well. The provider tax, which primarily funds affordable health care through Medicaid and MinnesotaCare, is set to expire at the end of this year. Policymakers will need to take action to maintain the provider tax so that our state continues to support access to health care for over one million Minnesotans.
  • Structural racism. Minnesota needs to address policies, formal practices, and other barriers that continue racial inequities. This could include formalizing practices that require policymakers to consider the impacts on racial equity during the policymaking process.

In 2016, policymakers dedicated $70 million over three years towards a number of policies that would promote racial equity, and Governor Mark Dayton started including equity and inclusion impacts on many items in his budget proposals. But much more work is needed. The time is now to advance racial equity in Minnesota. You can count on us to keep you informed on what progress policymakers are making at the Capitol.

-Clark Goldenrod

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Minnesota’s November budget forecast shows good news for right now, but the future’s looking iffy

Today’s forecasted surplus gives policymakers an opportunity to build toward shared prosperity that reaches Minnesotans across the state, whether in the Twin Cities or Greater Minnesota, or whether black, white, or brown.

Minnesota Management and Budget released the state’s November Budget and Economic Forecast. The November forecast estimates what the state would spend on schools, roads, and other public services under existing laws and current economic projections, and compares it to how much revenue the state would expect to bring in. This forecast is our first full look at Minnesota’s budget landscape since the end of the 2018 Legislative Session, and sets the stage for budget and tax decisions in 2019.

Many budget decisions made over the past eight years put Minnesota in a better financial position: balancing the books, crafting a more equitable tax system, and making investments in those Minnesotans who face the greatest barriers to thriving in today’s economy. Governor-elect Tim Walz and the 2019 Legislature should build on this momentum as they respond to the major fiscal issues of the upcoming session, including the scheduled expiration of the health care provider tax and updating the state’s tax code.

Here are our top takeaways from the forecast:

  1. With a surplus in the current biennium, the state was able to contribute to Minnesota’s budget reserve. One-third of the FY 2018-19 surplus plus other statutory allocations totaling $491 million were automatically transferred to the state’s budget reserve.
  2. The forecast projects a $1.5 billion surplus for the upcoming FY 2020-21 biennium. This includes the positive balance for FY 2018-19. Policymakers’ primary task in the upcoming legislative session will be to set a budget for the FY 2020-21 biennium, which starts on July 1, 2019.
  3. The November forecast also projects a future structural balance. Today’s report shows a $456 million positive balance for the upcoming FY 2022-23 biennium. However…
  4. …The future balances do not take into account what it takes to maintain current levels of state services. Keeping up with inflationary costs on Minnesota’s current commitments would cost another $1.2 billion in FY 2020-21 and $2.9 billion in FY 2022-23. In other words, these projections are built on the assumption of flat funding for most areas of the budget.
  5. The forecast documents start to show the potential impact of letting the provider tax expire. By FY 2023, the Health Care Access Fund will have a deficit of almost $1 billion if the provider tax is allowed to expire.This fund primarily goes to health care for one million Minnesotans.
  6. The forecast expects weaker long-term economic growth than projected in the February 2018 forecast. Every forecast includes a best guess at what the national economy will do over the next few years, and today’s report expects the economy to continue growing. But national GDP growth is expected to be more sluggish than earlier anticipated, slowing down substantially to 1.4 percent by 2023.
  7. There are a number of sources of uncertainty. IHS Markit, Minnesota’s economic consultant, assigns a 60 percent probability to their baseline economic forecast, a 25 percent probability to a more pessimistic scenario, and a 15 percent probability to a more optimistic scenario.
  8. This is one-time good news. The surplus is largely due to temporary, not ongoing, factors. The short-term economic boost from the federal tax bill last year begins to fade late next year, and global economic growth is expected to weaken.

What do these numbers mean for the tax and budget choices that policymakers will be facing during the 2019 Legislative Session?

This economic recovery is only weakly boosting living standards for everyday Minnesotans. In the upcoming session, we expect lawmakers to consider policies such as expanding access to earned safe and sick leave and paid family leave, which make a big difference in family economic security and require only a very modest financial investment from the state.

Policymakers also face key questions about how to maintain funding for essential services. They should take action this session to reverse the scheduled expiration of the health care provider tax, which is a critical source of funding for health care for more than one million Minnesotans, as well as investments in healthier communities. Allowing the provider tax to expire would leave a $680 million annual revenue shortfall. Policymakers are also likely to consider increasing the gas tax – which has lost about one-third of its buying power since 2000 – and other ways of meeting the state’s transportation and transit needs.

And, policymakers will again take up the challenge of maintaining Minnesota’s values in our tax code in the wake of a federal tax bill that violates principles of fairness and fiscal responsibility. Last session, although they were not able to agree to a broader tax package, Minnesota policymakers appeared to reach consensus that the state should update our tax code in ways that protected Minnesotans – including families with children, seniors, and people with disabilities – from the tax increases they would see if the state simply conformed to federal tax law changes. Today’s forecast numbers underscore that Minnesota cannot afford to enact additional permanent tax cuts for profitable corporations and the highest-income households, who got the biggest windfalls from the federal tax bill.

Finally, considering the forecast’s warnings about a weaker future economy, now is still a good time to continue to strengthen our state’s budget reserve. After today’s transfer, the current reserve is about 93 percent of the $2.2 billion recommended by Minnesota Management and Budget. Any additional transfers to the reserve will better enable Minnesotans to get through most recessions that might come our way. This is a responsible way to use one-time funding to better ensure Minnesotans get the supports they need to make it through tough times.

-Clark Goldenrod

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Minnesota Ranks High for Tax Fairness in 50-State Study

In an era of income inequality and growing concentration of wealth, a new 50-state study released today analyzes whether state tax systems make income inequality better or worse. The Institute on Taxation and Economic Policy (ITEP) finds that nearly every state fails basic measures of fairness, but Minnesota is among a small number of states where income inequality is reduced by state tax policy.

In their Who Pays? report, ITEP highlights a number of things that Minnesota does right to build a fairer tax system. These include:

  • A graduated personal income tax;
  • Targeted tax credits including the Working Family Credit, Property Tax Refunds for homeowners and renters, and the Child and Dependent Care Credit;
  • Having an estate tax; and
  • Excluding groceries from the sales tax.

In addition to their tax inequality index, ITEP evaluates states on what share of their incomes households of different income levels pay in taxes. It finds that nearly every state has an upside-down tax system in which low- and middle-income families pay a higher share of their incomes in state and local taxes than the wealthy. In other words, their tax systems are regressive.

Minnesota does a lot of things well, and the ITEP report points out ways we can build on this momentum. This would include expanding the Working Family Credit, with particular attention to improving the credit for workers without dependent children, who benefit much less from the credit as it is currently structured.

As policymakers debate whether and how to conform our state’s tax laws to the 2017 federal changes, they should make smart decisions that protect Minnesota’s tax fairness. For example, they should not conform to federal tax changes that would mean smaller state Property Tax Refunds for seniors, people living with disabilities, and families with dependents.

Policymakers should also reject lopsided tax cut proposals that would provide little benefit to struggling families while doing more for high-income households. For example, the 2018 legislative tax proposal included income tax rate reductions that would do nothing for an estimated 1 in 5 Minnesota households with lower incomes. As the ITEP report reminds us, while Minnesotans at all income levels pay roughly similar shares of their incomes in total state and local taxes, income taxes have a smaller impact on low- and moderate-income households. For these Minnesotans, sales taxes and property taxes make up a larger share of their total tax responsibility.wpv6-minnesota-table

ITEP’s report also paints a picture of what happens on the other side of the spectrum, in the “Terrible Ten” states with the most regressive tax systems. In states such as Washington, Texas, Florida, and South Dakota, low- and middle-income residents pay substantially higher shares of their incomes in state and local taxes than the wealthy.

ITEP notes that, in addition to exacerbating income inequality, unfair tax systems are unsustainable. When much of the income growth goes to high-income households, state tax systems that rely more heavily on taxing low- and middle-income residents struggle to raise enough revenue to fund their children’s education, parks and public spaces, infrastructure, and other basic services.

Minnesota has taken another path, one that has paid off for the residents of our state and that other states could follow. As Meg Wiehe, deputy director of ITEP and an author of the study notes, “Inequitable state tax systems don’t have to be a foregone conclusion…Tax policy should be used as a tool to help mitigate income disparities rather than to drive a wider divide.”

-Nan Madden

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October economic update shows higher state revenues, but mixed news on economic growth

The recently released October Revenue and Economic Update gave us mixed news about the state’s economic and budget landscape. The quarterly report from Minnesota Management and Budget (MMB) showed that the state revenues have come in higher than anticipated. It also reports that the national economy is expected to grow in the near term, but then that growth will taper off over the next few years.

Some of the top takeaways from the Update include:

1. State revenues for the most recent quarter came in above projections. The state’s revenues for July to September came in $282 million above projections; that’s 5.9 percent more than projected in the state’s February 2018 Economic Forecast. The increase is a result of a variety of factors, including higher income and corporate taxes received, as well as a higher than expected surplus in a state workers’ compensation fund.

2. State revenues for the past fiscal year came in slightly above projections. The state’s revenues for FY 2018, which ended on June 30, came in $376 million above projections, or 1.7 more than was projected in the February forecast.

3. Long-term economic growth is expected to be lower. The national economic forecasters predict stronger national GDP growth for 2018. The October update predicts 2.9 percent growth in 2018, up from the 2.7 percent predicted in February. In 2019, growth is projected to be 2.8 percent, very similar to the 2.7 percent anticipated in February. However, growth is then expected to slow to 1.6 percent by 2021. The slower growth in 2020 and beyond is due to several factors, including the effects of the new tariffs between the U.S. and China.

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4. National unemployment rate expected to remain low. Nationally, unemployment was 3.7 percent in September, and is expected to drop to 3.5 percent on average in 2019. Job growth has slowed slightly, with the economy adding around 134,000 jobs in September, compared to the average of 200,000 jobs per month earlier this year. This slowdown is expected to be a temporary effect of Hurricane Florence, which hit the Southeast coast in September.

5. Forecasters are fairly confident in their projections. The forecasters assign a 60 percent chance that their baseline forecast is correct. They also give a 25 percent chance for a more pessimistic scenario in which there’s a recession starting next year, and assign a 15 percent probability to a more optimistic scenario.

The next legislative session starts in just a few months, and policymakers will need to put together the state’s next two-year budget. In early December, we’ll see the state’s November Budget and Economic Forecast, which will give us an updated and more complete picture of what resources will be available as policymakers and the public engage in next year’s budget debate.

After the conclusion of this past legislative session, we estimated that the state could expect a surplus of about $300 million for FY 2020-21. The increased revenues measured in this week’s economic update suggest that number could get larger by the time the November economic forecast comes out. However, the lower expected economic growth in the longer term could also dampen future revenues.

-Clark Goldenrod

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Now is the time to say no to a new rule that would increase hardship for New Americans

A proposed federal rule would make it harder for New Americans on their path to citizenship and folks moving to the country to thrive and to fully contribute to our communities. This proposal doesn’t match our Minnesota values, and it is important to make your voice heard.

Today begins a 60-day public comment period on the rule that would greatly expand how “public charge” is determined in the future, and would ultimately harm families trying to put a roof over their head or buy groceries to feed growing kids.

This rule would judge the value of New Americans by how much money they have, rather than how they live their lives and contribute to their communities.

Federal policymakers need to hear from you that this isn’t the direction we want for our country. See our action alert with directions on how to add your voice.

For more details about the proposed rule and the damage it would do, read our earlier blog.

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We’re Hiring a Policy Advocate and a Communications Intern

For more than 20 years, the Minnesota Budget Project has worked toward a vision for Minnesota in which a fair tax system raises enough revenue to fund our priorities as a state, and economic policies ensure opportunity is available to all. We do it through analysis, advocacy, and strategic communications, and currently have two open positions on our team.

Policy Advocate:

The Minnesota Budget Project is seeking a Policy Advocate to work on economic security issues, including affordable health care and child care.

This an exciting opportunity for anyone interested in producing compelling analysis, exploring policy solutions, and engaging with state and national partners in support of policies that expand opportunity and economic security to all Minnesotans, particularly Minnesotans with low incomes.

Applications will be reviewed on a rolling basis; apply by October 23 for the strongest consideration. Learn more about the position and how to apply here.

Communications Intern: 

You: Inspired to create change in your community, and looking to contribute your skills and gain experience in promoting public policies that impact Minnesotans with low incomes and communities of color.

Us: The Minnesota Budget Project is a leading voice advocating for affordable health care, affordable child care, and progressive tax policy in Minnesota.

We’re hiring a part-time communications intern for the 2019 Minnesota Legislative Session. This is a paid position focused on creating digital and public engagement strategies for our current policy agenda. Learn more about the job, and submit your cover letter and resume online by Friday, October 26.

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New federal rule would increase hardship among New Americans

This weekend, draft language for a new “public charge” rule was released by the U.S. Department of Homeland Security (DHS). This rule would make it harder for New Americans on their path to citizenship and folks moving to the country to thrive and to fully contribute to our communities and the economy.

This draft rule judges the value of New Americans by how much money they have, rather than how they live their lives and contribute to their communities. Currently, when people apply to adjust their immigration status, like applying for a “green card” that allows New Americans to live and work in the U.S., the government determines whether that person has “public charge” status. This status is based on a number of factors, including age, health, family status, financial status, and skills, but also includes use or potential use of public supports. Under current policy, only two types of supports are counted to determine “public charge” status: cash assistance (like Temporary Assistance for Needy Families, or TANF) and use of long-term care facilities. The same process occurs when people apply to move to the U.S. Having “public charge” status can make individuals ineligible to come to the United States or receive a green card.

The new rule would greatly expand how “public charge” is determined in the future and would harm families trying to put a roof over their head or buy groceries to feed growing kids. The draft rule proposes adding supports like the Supplemental Nutrition Assistance Program (SNAP), housing assistance, and Medicaid health insurance to the list of services considered in evaluating “public charge” status. Additionally, while it is not in the current rule, DHS has expressed interest in also including the Children’s Health Insurance Program (CHIP).

The new rule also would require that New Americans earn at least 125 percent of the poverty line to not be negatively affected by the “public charge” determination. The rule would also adopt a threshold of 250 percent of the poverty line (or almost $63,000 for a household of four) for a family to receive a favorable consideration. For context, around 40 percent of people living in the United States earn less than this standard. People often move to the United States in search of greater economic opportunity, but the rule sends the message that only New Americans who already have money and resources are welcome.

The new rule goes against our country’s basic values. Our government has long held that certain supports, such as those that improve health, should be available to everyone who needs them. The rule also ignores how New Americans are contributing to our communities, as our neighbors who work, pay taxes, and learn alongside us. But the new rule abandons this logic and explicitly recognizes that it may “increase the poverty of certain families and children, including U.S. citizen children.”

This rule would likely create confusion around who can access basic supports that many of us turn to in times of need. Those harmed include the New Americans who are unsure whether they can still qualify for basic services, like food and housing assistance, as well as many children who might not get the supports they need to remain healthy and succeed in school. And New American families are already dropping off certain supports in response to concerns about these changes.

This new proposed rule further continues a pattern of federal lawmakers prioritizing those who are already doing well in today’s economy. For example, late last year federal policymakers passed a large tax bill that overwhelmingly benefited the wealthy and profitable corporations. These tax cuts have increased the federal deficit, and since then, purportedly in response to the increased deficit, President Donald Trump and the U.S. House have proposed funding cuts that would increase hardship and poverty across the nation. The new proposed rule is the latest step that would further pull out the rug from families who are trying to make ends meet. Additionally, the rule would disproportionately affect people of color, who are more likely to come to the United States through the primary process subject to public charge determination.

This proposed rule is a mistake. New Americans are vital contributors to our communities, and they should be able to receive basic supports so that they can thrive and build our economy. The draft rule is expected to be included in the Federal Register in the next few weeks, perhaps as early as tomorrow. You will have an opportunity to have your concerns heard by making a comment on this proposal; we’ll post information about how to do so once the comment period is open.

-Clark Goldenrod

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