January 23, 2009
Minnesota Budget Update
Governor Tim Pawlenty said Thursday that the budget he will present next week does not include tax increases and contains few rises in fees. The Governor plans to eliminate a projected $5 billion deficit through a package of cuts and accounting shifts, such as changes in payment schedules and a historic low in fee increases. He previewed the budget to reporters in his Capitol office, stating that the bad economy calls for dramatic change.
Pawlenty's budget gives the Democrats, who control the Minnesota Legislature, a starting point for this tough and lengthy task of tackling a near $5 billion shortfall this session. DFL legislators have promised to hold hearings around the state on the Governor's budget proposals and will eventually release their own plan for balancing the budget through the next biennium.
State legislative leaders expect a federal stimulus package to help with rebuilding Minnesota's economy. On Thursday, Minnesota received news that the federal stimulus package being shaped in Washington could bring $3.2 billion to the state, amounting to about 10 percent of Minnesota's total budget. $3.2 billion is enough to pay for everything the state spends on public safety, prisons, the environment, energy, agriculture, veterans, job development, all state agencies, transportation and natural resources for two years. When it arrives, the federal money is expected to come with definite strings attached, including detailed requirements for how it can be spent and required documentation for transparency. The estimate from the National Conference of State Legislatures breaks the money down into numerous categories, including K-12 education, construction, child care, clean water, drinking water, Medicaid and even weatherization.
A $3 billion aid package would only cushion Minnesota from the state's rising deficit. The state's projected deficit for 2010-11 is $4.8 billion as of November, but the economy has spiraled downward since then, and the shortfall could reach $6 billion or more. Recent reports show that Minnesota is approaching 7 percent unemployment, with job losses in nearly every sector.
Gov. Tim Pawlenty said the federal fiscal stimulus will be welcomed but that the short-term outlook does not look good. “We're in economic collapse,” Pawlenty said. “The job numbers have been terrible for a while and will continue to be terrible until the economy begins to turn around.”
Pawlenty warned that the budget deficit will probably get worse before it gets better, and Minnesota is likely to see a further short-term deficit in the current budget that runs through June. House and Senate Republicans called for a 5-year business tax holiday for companies that create jobs by expanding or relocating to the state. Pawlenty said he supports the concept but doesn't want to create unequal tax treatment between competing businesses. He said the focus on jobs is critical.
Senate Recount Update
Al Franken's effort to block Norm Coleman's lawsuit over the U.S. Senate recount was rejected by the three-judge panel on Thursday. The trial regarding the U.S. Senate recount in Minnesota is scheduled to begin Monday at the Minnesota Justice Center in St. Paul.
Republican Norm Coleman asked the three-judge panel Thursday to order inspectors to visit 86 precincts around the state to re-examine ballots for possible double-counting and other irregularities. Attorneys for Democrat Al Franken opposed the proposal, saying it came too late for the trial on Coleman's challenge, scheduled to start Monday. Earlier this month, the state Canvassing Board certified the recount results, which gave Franken a 225-vote lead.
Hundreds of votes could be in play in the 86 precincts, which include 22 that Coleman cited earlier as ones where votes might have been counted twice. Most of those were in Democratic-leaning areas of Minneapolis. Earlier this week, the Coleman campaign had expressed a desire for a reconsideration of as many as 11,000 rejected absentee ballots around the state. The re-examination his campaign seeks would involve three inspectors, one from each campaign, and a nonpartisan inspector going to precincts and taking another look at specific ballots, avoiding inconsistencies from county to county. Unresolved disagreements over ballots would be brought to the panel for resolution at trial.
The panel also rejected Franken's attempt to limit any court review to verifying math and other technicalities of the recount and canvass, allowing the judges to consider Coleman claims that some votes in Democratic areas were counted twice, that some absentee ballots from Republican-leaning areas were wrongly rejected and that there were other irregularities.
Franken had argued that state law and the U.S. Constitution sharply restricted any lawsuit over the results of a U.S. Senate election. But the panel disagreed, saying a court's review of an election “is not limited to the purely ministerial task of ensuring that the tallies from the canvassing board are free from mathematical error.”
2010 Gubernatorial Update
Former U.S. Senator Mark Dayton filed papers with the state on Friday to launch his campaign for governor in 2010, joining a growing list of DFLers seeking the office. Dayton, 61, is a Minneapolis DFLer who served one term in the U.S. Senate and did not seek reelection. Dayton said he will begin an exploratory campaign to listen to citizen concerns and seek support.
Several other DFLers have expressed interest in running for governor in 2010. Five of them have filed necessary paperwork: Sen. John Marty of Roseville; Sen. Tom Bakk of Cook; Ramsey County Attorney Susan Gaertner; Rep. Paul Thissen of Minneapolis; and frequent candidate Ole Savior. Others mentioned as possible DFL candidates include House Speaker Margaret Anderson Kelliher of Minneapolis; Minneapolis Mayor R.T. Rybak; St. Paul Mayor Chris Coleman; former House Minority Leader Matt Entenza of St. Paul; and Assistant Senate Majority Leader Tarryl Clark of St. Cloud.
Job Losses Rise in Minnesota
Minnesota employment officials said today that the state's manufacturers, construction firms, retailers and other employers cut 11,800 jobs in December, raising the unemployment rate to 6.9 percent, one of the highest rates in many years. In addition, state and federal officials announced that they had revised Minnesota's November job loss numbers upward, saying the state lost 13,366 more jobs during that month than previously believed.
Minnesota lost 55,400 jobs in 2008, or 2 percent of its 3 million jobs, the same job loss rate for the nation as a whole. The U.S. lost 524,000 jobs last month, which pushed the unemployment rate to 7.2 percent. Transportation, utilities and trade lost 5,300 jobs, while government, manufacturing, and professional services lost a respective 2,900, 2,900 and 1,600 positions. Hospitality, construction and financial services lost 1,400, 1,110 and 600 jobs, respectively.
Only two sectors—health services and education—reported job gains for the month, but they added just 4,100 jobs, not enough to offset much of the overall decline.
Minnesota Cuts Health and Human Services Budget
The Minnesota Departments of Health (MDH) and Human Services (DHS) is expected to lose $7.7 million in administrative and operational costs for the fiscal year ending June 30, 2009. However, neither department will have to layoff anyone right now because of work-schedule changes and other money-saving moves made by the two state agencies, who employ a total of 8,500 employees.
MDH and DHS are cutting agency costs by $1.7 million and $6 million, respectively, to help meet the budget shortfall. Craig Acomb, the chief financial officer for DHS, stated Wednesday at a Capitol hearing before the Senate Health and Human Services Budget Division that MDH and DHS are attempting to work with the budget cuts without laying off any employees. At the hearing, MDH and DHS officials testified about the impact of unallotment on the agencies following December revenue projections that the state is facing a nearly $5.3 billion budget shortfall.
Gov. Tim Pawlenty cut $73 million of DHS funding December 19 as part of an effort to cut state spending by $426.3 million to balance the State budget by June 30. DHS spokeswoman Terry Gunderson said the $6 million in cost-cutting represents DHS' portion of $40 million in unspent department funds that Pawlenty wanted to help plug the deficit gap. Jayne Rankin, DHS budget director, and Acomb could deal with further budget reductions in early March, when state officials present a new revenue forecast for the rest of 2009 and the next two-year budget cycle.
State Sen. Linda Berglin, DFL-Minneapolis and chairwoman of the committee, told colleagues and those testifying before the Senate panel that immediate cuts for fiscal 2009 will be rough on Minnesota, excluding the $4.8 billion shortfall projected for the 2010-11 biennium.
Carbon Intensity Reduction Bill Heard
The Senate Energy, Utilities, Technology and Communications Committee met Thursday to discuss a bill establishing standards to reduce the carbon intensity of transportation fuels. The bill authored by Senator Kathy Sheran (DFL-Mankato) calls for a reduction in the carbon intensity of the fuels for sale in Minnesota by a minimum of ten percent over the ten year period from 2011 through 2020. While no exclusive methods are recommended to achieve this reduction, Sheran cited changes in production, extraction processes, or blending high-carbon intensity fuels with low-carbon intensity fuels such as biofuels.
Promoters of this legislation argue that bill will help reduce greenhouse gas emissions by 36 million tons by the year 2020. The bill, they said, could have an impact by inspiring innovations in biofuel technologies which could lead to an increase in “green jobs” and would create sustainable economies in rural communities.
Diane Schmidt, Vice President of the Koch Companies Public Sector, said that this bill could increase consumer costs, destabilize state fuel supplies and negatively affect local industries that import and refine crude oil.
For up-to-date information about the Minnesota Legislature, tune into Almanac: At the Capitol. This lively and informative program is aired Wednesdays during the legislative session on Twin Cities Public Television at 7:00 PM on Channel 17 and at 10:00 PM on Channel 2.
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