A few more numbers on the House budget proposal

On Friday, the House Ways and Means committee officially passed a budget resolution with a set of spending targets (which are the maximum spending limits for the FY 2010-11 budget biennium for each of the major finance bills).

Representative Solberg also provided somewhat more detailed information on how the House proposes to balance the budget over the next four years. They gave out several spreadsheets which laid out for each committee the level of proposed spending cuts, accounting shifts and federal economic recovery dollars. For your edification, I’ve scanned and posted this new info to our web site.

This hearing was about the spending side of the ledger – the revenue side will start to come into focus this week, with a more detailed tax reform proposal expected to come out in the House Property Tax and Local Sales Division.

Here’s a quick overview of the House plan:

The House solution to the $4.8 billion deficit for FY 2010-11:

Approximately one-third is accounting shifts;
one-third is tax increases;
one-sixth is spending cuts; and
one-sixth is federal economic recovery money.
The leftover fraction goes into the budget reserve.

What the FY 2010-11 budget would look like:

  • Representative Solberg argued that the House would raise revenue by less than the Governor – $1.5 billion vs. $1.8 billion (the House argues the Governor raises revenue via his bonding proposal and merging the Health Care Access Fund into the general fund).
  • Like the Governor, the House would cut higher education and E-12 education funding, then backfill the resulting budget hole with money from the federal state fiscal stabilization fund. Net result: No cuts to higher education and E-12 education in FY 2010-11. It’s important to note that there might be a bit (maybe $30 or so million) of state fiscal stabilization money leftover under the House proposal. The remaining dollars, by law, would flow directly to local school districts with high proportions of disadvantaged students.

The House solution to the $5.1 billion deficit for FY 2012-13:

Not surprisingly, with the extra money from the feds gone, the House ‘outyears’ budget must rely more heavily on tax increases and spending cuts. More than half of their solution for the projected $5.1 billion deficit for the  FY 2012-13 biennium would come from revenue increases ($2.9 billion), while about 40% would come from spending reductions ($2.1 billion).

-Katherine Blauvelt

About Katherine Blauvelt

Katherine Blauvelt served as the Minnesota Budget Project’s policy analyst from 2007 to 2009.
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