Even though we are in the midst of negotiations to solve our state’s budget deficit, this is still a good time to be thinking about HOW that process works. Yesterday, Senator Cohen assembled an omnibus budget process reform bill (SF 3363) that we hope will eventually become law. Although we don’t have a position on every element in the bill, there are some very important provisions that we strongly support (you can also read my testimony from the Senate Finance Committee hearing):
- Let’s fix the forecast! In 2002, policymakers changed the law so that our state’s economic forecasts no longer include the impact of inflation on most areas of state spending. Putting inflation back in the forecast is a wise move that is long overdue. The forecast should give us all the information we need to make good budget decisions. For more background on this issue, visit our website.
- We love information! And the Senate budget reform package includes some requirements to improve the depth and breadth of information included in the Governor’s budget books. That’s great…more data means that both policymakers and the public will be better informed as we debate the issues.
- Build the reserves! Not a sexy issue…but in times of deficit we are certainly relieved to know there is a little money in the bank to help soften the blow. The Senate package would implement a plan to automatically rebuild the reserves up to 5% of the biennual budget (about $1.8 billion…compared to the current $653 million). We support the idea of automatically directing funds the reserve. We also support a goal of 5%, although we recognize it will probably be hard to get there, it’s what Minnesota’s Council of Economic Advisors consistently recommends.
The Senate bill is now awaiting action on the Senate floor. Similar measures are also moving through the House. But any budget reform efforts may have a tough time becoming law; last year the Governor cited the inflation in the forecast provision as the reason why he vetoed the tax bill.