Jobs, economic development top supplemental spending

While the House and Senate put forward very different visions around how to use the projected $900 million surplus this session, legislators put together a supplemental budget bill (House File 2749) in the last days of the legislative session that had a net general fund impact of $182 million for FY 2017, providing the largest funding boost in economic development. The total impact of the bill increases to $233 million in FY 2018-19. This budget bill includes $26 million in FY 2017 and $67 million in FY 2018-19 in tax cuts in its state government provisions. The Legislature also passed a tax bill totaling $257 million in FY 2017 and $544 million in FY 2018-19.

FY 2016-17 Supplemental Budget General Fund Proposals (Net General Fund Changes)
Governor House Senate Conference Agreement
Jobs and Energy $129 million $12 million $189 million $75 million
State Government $51 million -$10 million $36 million $45 million*
E-12 Education $61 million $0 $59 million $25 million
Public Safety $65 million -$793,000 $43 million $25 million
Environment and Agriculture $11 million $2 million $27 million $7 million
Higher Education $76 million $0 $48 million $5 million
Health and Human Services $86 million $0 $51 million $0
Transportation $15 million $260,000 $1.8 million $0
Tax Cuts and Aids to Local Governments (House File 848) $140 million $999 million $283 million $257 million
Total $635 million $1 billion $738 million $440 million
*This total includes the tax cut provisions in the supplemental budget bill.

In the budget bill, policymakers put the most additional resources towards jobs and economic development, where they allocated $75 million in FY 2017. Providing access to broadband for Greater Minnesota was a priority expressed by the House, Senate and governor, and about half of the funding in this area ($35 million) is for that purpose. Only $5 million can go to underserved areas, defined as areas where households and businesses have internet speeds slower than the state’s 2026 goals. Policymakers also set aside up to $500,000 for areas with significant low-income populations. The final funding for broadband is much closer to the proposed House figure of $15 million than the governor’s and Senate’s proposals of $100 million and $85 million, respectively.

The final equity agreement includes important provisions that work to move the needle on the state’s economic disparities. Policymakers dedicated $35 million in FY 2017 and $35 in FY 2018-19 for equity initiatives such as:

  • $6.9 million in grants for the Latino, Somali, Southeast Asian, and American Indian communities to address educational, employment, and workforce disparities, and to support youth; and
  • $1.5 million to promote high-wage, high-demand nontraditional jobs for women.

Policymakers invested $25 million of the surplus in E-12 education. The House and Senate agreed to fund one of the governor’s highest priorities, voluntary pre-kindergarten, with $19 million in FY 2017. The education provisions also include funding to support development of teachers and proper placement of support staff to help improve students’ learning environments, as well as for early education and equity aid funding changes. Much of these funding increases are made possible through savings resulting from a loan refinancing option for some school districts.

Policymakers invested $5 million in higher education, with $2 million for the state grant program, which lowers the cost of college for low- and moderate-income students, and $500,000 for colleges and universities to narrow gaps in college education attainment between students of color and white students.

While the House and Senate found agreement in many areas of the budget, the transportation and bonding discussions proved to be less productive. For the second year in a row, policymakers failed to pass a substantial transportation bill due to disagreements on which transportation investments the state should make and how they should be funded. Last year, policymakers passed a transportation budget that maintained the status quo, but there was no funding allocated this year. Legislative sessions in even numbered calendar years like this one are also typically “bonding years,” where policymakers pass a capital budget bill that invests in our state’s infrastructure, such as roads and buildings. Policymakers this year were unable to pass a bonding bill during the legislative session.

There is discussion that policymakers will return to the Capitol this summer to pass bonding and transportation budgets.

We discuss more of the health and human services and tax details elsewhere on our blog. In health and human services, legislators agreed to some important investments in mental health and Medical Assistance. They also missed critical opportunities to improve MinnesotaCare, expand access to affordable child care, and support struggling families through the Minnesota Family Investment Program. The tax bill includes several provisions that make working families its priority, including nation-leading improvements to the Working Family Credit, and expansions of the Child and Dependent Care Credit.

The House and Senate passed the supplemental budget bill Sunday night.  It now is in the governor’s hands where he has the power to sign, veto, or line-item veto this supplemental budget.

-Clark Biegler

About Clark Biegler

Clark Biegler is the Minnesota Budget Project's policy analyst.
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