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Minnesota Government Update


January 19, 2009


Governor Pawlenty Delivers State of the State Address
Governor Pawlenty's State of the State Address delivered on January 15 sets the stage for deep spending cuts and business tax reductions that may occur this Session in the Minnesota Legislature. Pawlenty did propose a modest increase for K-12 schools that abide by his teacher merit pay plan known as Q Comp and meet other performance criteria and said that he would preserve children's health insurance, but that legislators should brace for heavy cuts in other areas.

"Our challenge this year is not just to close the huge budget deficit," he stated. "We also have to strategically position Minnesota to thrive in a very different world."

Pawlenty proposed freezing all state government wages for two years and extending the freeze to any government entity that accepts State money. That could include local and county government workers and thousands of teachers and professors.

House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said that a quick calculation of the impact of the proposed business tax cuts and education increases, when fully phased in, showed that they could add as much as $800 million to $1 billion to the deficit.

"We were looking toward the Governor to make concrete solutions to how we are going to solve this very mammoth problem together," Kelliher said. "The Governor's answer was to actually make the problem worse." Republican legislative leaders called Pawlenty's speech "uplifting" and "even courageous."

In addition to significant health-care spending cuts and a state wage freeze, Pawlenty seeks a tuition cap on colleges and universities. He wants the state's 87 counties to give up one of their major functions -- providing human services -- and instead let such services be provided by 15 "regional enterprises" spread across the state. Similarly, the state's 490 school districts and charter schools should be required to do bulk purchasing for food, textbooks and supplies.

Chief Justice Calls for More State Funding for Courts
Minnesota Supreme Court Chief Justice Eric Magnuson stated on Wednesday at a press conference that the integrity of Minnesota's court system will be greatly diminished without a funding increase. Magnuson was backed by a coalition of law enforcement officials that included county attorneys, sheriffs, public defenders, chiefs of police and former Minneapolis Mayor Sharon Sayles Belton.

The Chief Justice is asking for a $43 million increase over the two-year budget request of $600 million for the State court system. The Governor, however, in light of the $5 billion budget shortfall, has asked state agencies to find ways to cut ten percent off their current budget. A spokesperson for the Governor stated, "Almost 80 percent of [the courts'] requested funding increase is for salary and benefit increases for judges and court personnel. In an era when we are urging pay freezes for government employees, we suggest they reexamine their priorities."

Magnuson stressed the importance of funding the courts in order to ensure public safety and the rule of law in Minnesota. Magnuson stated that some of the requested money would go to pay increases for union employees as obligated by contract, but that the judges were not getting pay-increases. Magnuson has been making his case to legislators, who will vote on a budget this session, as well as the Governor, who appointed Magnuson last year.

Governors of Minnesota and Wisconsin Working Together to Cut Costs
The Governors of Wisconsin and Minnesota said Tuesday at a joint press conference that they are working together to combine operations such as purchasing and technology to save their states money in the face of budget shortfalls projected at around $5 billion in both Minnesota and Wisconsin.

Governor Tim Pawlenty and Wisconsin Governor Jim Doyle will examine measures such as volume purchasing of the 600,000 tons of road salt both states use each season; Wisconsin's borrowing of Minnesota's helicopters for deer counts; and combining operations in areas such as licensing and call centers. Pawlenty commended Wisconsin's system for determining eligibility for human services programs and suggested that Minnesota should contract out with Wisconsin rather than spend millions trying to duplicate the system. Among other areas being considered are cooperation in purchasing institutional food, such as in prisons; purchasing and licensing of software; sharing warehouse space; cooperation in fishery and nursery operations; and the Duluth and Superior harbor inspections. Governors Pawlenty and Doyle signed executive orders directing their staffs to come up with plans for cooperation by Feb. 27. It's unclear how much may be saved from sharing state services, but Pawlenty stated that millions of dollars could be saved from this cooperative effort.

Minnesota Budget Update: Long-Term Fix Needed
State leaders and legislators have yet to outline a solution to the $5 billion budget shortfall projected through mid-2011. The budget deficit looks as though it is increasing-state tax collectors stated Monday that they took in $131 million (4.5%) less than they had anticipated in November and December as corporate taxes plummeted below projections, and income and sales taxes were also down.

A bipartisan budget panel met Monday to discuss the State Budget Trends Study Commission's fiscal recovery plan. This plan includes some controversial and difficult choices such as dedicating the next budget surpluses to strengthening the rainy-day account, cleaning up the ledgers, and refusing to spend forecast surpluses until they are secured.

Jay Kiedrowski, a former finance commissioner who served as co-chairman of the panel with former Human Services Commissioner Kevin Goodno, blamed as much as $2 billion of the current deficit on long-term structural problems. The commission reported that Minnesota should have $2.1 billion to $2.7 billion in the bank in order to survive economic downturns. The commission advised the Legislature to balance for the next four years rather than just the next biennium. The panel made recommendations to legislators to factor in growing inflation into the budget forecasts and to slow down on public health care spending, which is the fastest growing item in the state budget.

The report's findings include:
  • As baby boomers retire over the next quarter century, they will pay fewer taxes and use more medical services, contributing to a 1.6 percent-a-year mismatch between growth in state revenue and spending.
  • By 2033, working Minnesotans will be outnumbered by seniors and children who rely on the state for education, health care and other services.

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.

Almanac: At the Capitol is seen on all public television stations throughout Minnesota and in Fargo. Winthrop & Weinstine is the exclusive law-firm partner and a sponsor of the program.

For more information and to see previous broadcasts, check out the Almanac: At the Capitol Web site at http://tpt.org/aatc/. 

 
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