The Governor’s budget proposal, released this afternoon, lists his top three priorities as enhancing our job climate, improving K-12 education and protecting state public safety programs. Unfortunately, many of his proposals will cut the ground out from beneath families struggling in this economy. While the Governor undoubtedly faced a huge challenge in coming up with solution to the $4.8 billion deficit for FY 2010-11, he made his task even more difficult by taking revenue increases off the table.
After a quick look at some of the documents, here are a few key points:
- Under the Governor’s budget, general fund spending for FY 2010-11 would be $750 million below spending in FY 2008-09. That doesn’t sound like a big deal…but it is. Even though just about every economist will tell you that government spending is the surest bet for stimulating the state’s economy in a recession, the Governor would take us backwards.
- The Governor’s proposal to create jobs focuses exclusively on tax cuts/incentives for businesses, which he hopes will stimulate job creation. Meanwhile, he proposes $2.4 billion in permanent spending cuts, which we know will result in the loss of jobs in the public, for-profit and nonprofit sectors as services are severely reduced or eliminated. Research shows business tax cuts are not an effective way of providing stimulus.
- For families struggling in this economy, the Governor limits their options. His proposal includes moves like eliminating adult eligibility for MinnesotaCare and eliminating dental benefits, reducing funding for child care, cutting $50 million per year from the Renters’ Credit, reducing state support for higher education by more than $300 million next biennium, and much more. We’ll provide more in-depth analysis on his proposals in the coming days – and we’ll also connect you with the great analysis being done by others.
A few other major components of the Governor’s budget include:
- He assumes Minnesota will get $920 million in federal stimulus relief (this is just a placeholder amount for now).
- He reduces the FY 2010-11 deficit by $1.3 billion by shifting K-12 education payments into the future.
- He raises close to $1 billion upfront by selling bonds secured with our tobacco lawsuit revenues.
We will give the Governor credit for putting $250 million in the budget reserve to help resolve any current-biennium deficit that might arise in the next few months.
As an alternative to the Governor’s approach, earlier today, the Minnesota Budget Project joined with the Organizing Apprenticeship Project to recommend a set of Kitchen Table Principles for solving the budget deficit. These principles, developed through conversations with people from around the state over the last six weeks, reflect the values of ordinary Minnesotans who are concerned about the state’s future.
Of course, we encourage you to take a first-hand look at the Governor’s budget proposal. You can review his powerpoint, look over issue briefs and read the detailed proposals for each agency on the Minnesota Management and Budget website.