Presentation Minnesota Management Budget by jolinmilioncherie


Governor Tim Pawlenty
 FY 2010-11 BIENNIAL

All budget documents can be found at
     A Lot Has Changed in Two Years

• Current budget was set on May 30, 2007 with an
 agreement for a $34.6 billion biennial budget

 •   Economy was growing at 2.1%

 •   2,771,400 Minnesotans had jobs

 •   Federal budget deficit was $161 billion (1.2% of GDP)
     A Lot Has Changed in Two Years

• Today we are preparing the next budget based on
 revenues of $31.9 billion

 •   Economy is expected to shrink by 2.5%

 •   2,720,400 Minnesotans have jobs

 •   Federal budget deficit is $1.2 trillion (8.3% of GDP)
Governor Pawlenty’s Budget Principles

• Balance the budget
• Fund priorities in order of importance
• Strategically position Minnesota for success
 in a changing world
• Enhance and expand pay for performance
• Don’t increase burdens by raising taxes
 Important Financial Management Goals

• $250 million in budget reserves to address
 additional economic risk
• $350 million in cash flow account
• Understate potential level of federal fiscal
 assistance until finalized
• Improve structural budget – reduce 2012-13
 budget gap by nearly half
           Budget Bottom Line

General Fund Expenditures
FY 08-09              $34.36 billion

FY 10-11              $33.61 billion

Difference            -2.2% ($750 million)
Governor’s Budget Solution: $4.8 billion deficit

   Shortfall for FY10-11 ($ millions)   ($4,847)

   Spending Cuts, Savings                 2,521

   Other Resources                        3,197

   Tax Cuts, Initiatives, Reserve         (860)

   Total Recommendations                 $4,858

   Balance                                  $11
Budget Solution: Spending Cuts, Savings

 Proposed Changes ($ millions):    Impact

 Permanent Spending Cuts           $2,368

 Health Care Access Fund & other     153

 Subtotal                          $2,521
 Budget Solution: Other Resources

Proposed Changes ($ millions):      Impact

Federal stimulus placeholder         $920

K-12 payment shifts                  1,294

Tobacco appropriation bonds (net)     983

Subtotal                            $3,197
Budget Solution: Tax Cuts, Initiatives, Reserve

 Proposed Changes ($ millions):       Impact

 New Spending Initiatives               $323

 Tax Cuts                                287
 Budget Reserve                          250

 Subtotal                               $860
Governor Pawlenty’s Top Budget Priorities

• Enhance Minnesota’s job climate

• Improve K-12 education

• Protect state public safety programs

• Maintain military and veterans programs

• Increase government reform and
       Minnesota Jobs Recovery Act

• Job creation is the priority
• Improve Business Climate
  •   Reduce Minnesota’s high business tax rate
  •   Upfront capital equipment sales tax exemption
  •   Reinvestment Tax Credit
  •   One-year deduction for equipment purchases
  •   Angel and early stage capital tax credits
  •   50% capital gains exemption
     Transforming K-12 Education

• Increase K-12 funding, even in a budget
• Transform K-12 education funding system
  by linking all future funding increases to
  improved performance
• Require all districts and charter schools to
  use Q Comp performance pay system
   K-12 Education Reforms: Q Comp

• 44 school districts and 26 charter schools
  currently in Q Comp professional development
  and achievement-based pay program

• For districts not currently in Q Comp, authorize
  permanent per pupil funding increase of $300, an
  amount comparable to a 5% increase in the
  general education funding formula
K-12 Education Reforms: Pay for Progress

• New “Pay for Progress” initiative will link additional
  K-12 funding increases to student achievement

• School districts and charter schools will receive up
  to an additional 2 percent per student on the
  general education formula for students meeting
  standards or showing reasonable progress toward
Governor’s Proposed FY10-11 Budget

                     General Fund Spending
                           $33.611 Billion
                                                  Environ, Energy & Nat
                            Health & Human Svcs            1.0%
    Property Tax Aids/Cr            33.7%                Economic Development
           8.6%                                                  0.7%
     Higher Education                                         Public Safety
           8.5%                                                  5.0%

                                                          Agriculture & Veterans

                                                        State Government
                                                  Debt Svc & Other
                             K-12 Education             0.7%
Proposed FY10-11 All Funds Budget
                  All Operating Funds Spending
                                 $57.648 Billion

                                                   General Fund

        Debt Service Fund

   Other Spec Rev Funds
         / Transfers

    Trunk Highway Fund

                 Federal Funds
    FY08-09 vs. Proposed FY10-11

               ($ millions)                             FY 08-09             Gov 10-11           % Chg.

K-12 Education*                                               13,797                14,059          1.9

Higher Education                                                3,099                    2,845     (8.2)

Local Aids, Prop. Tax Credits                                   3,062                    2,897     (5.4)
Health & Human Services**                                     10,328                    11,324      9.6
Debt Service/Capital Projects***                                   883                    114     (87.1)

All Other Omnibus areas                                         3,919                    3,555     (9.3)

  * For comparability, excludes K-12 shift savings
  ** For comparability, reflects HHS Combined General and Health Care Access Funds
  *** Reduction reflects general fund costs to be paid by tobacco appropriation bonds
Forecast vs. Proposed FY10-11 Budget

                 ($ millions)                              Forecast             Governor          % Chg.
                                                            FY10-11              FY10-11
 K-12 Education*                                                 13,903                  14,059      1.1

 Higher Education                                                  3,158                  2,845     (9.9)

 Property Tax/Local Aids                                           3,419                  2,897    (15.3)
 Health & Human Services**                                       12,627                  11,324    (10.3)
 Debt Service/Capital Projects***                                  1,097                   114     (89.6)

 All Other Omnibus areas                                           3,620                  3,555     (1.8)

   * For comparability, excludes K-12 shift savings
   ** For comparability, reflects HHS Combined General and Health Care Access Funds
   *** Reduction reflects general fund costs to be paid by tobacco appropriation bonds
Plan Substantially Reduces FY 2012-13 Gap

                     Forecast    Governor

  ($ millions)        FY12-13     FY12-13

  Revenues             34,558      35,367

  Spending             39,162      37,903

     Projected Gap    $(4,604)    $(2,536)
         Health Care Programs

 Preserve coverage for children
 Obtain better value
    Tie chemical dependency spending to
    Secure better placement process for vulnerable
     children through Northstar Care for Children
    Strengthen provider standards and controls on
     authorization of personal care attendant services
           Health Care Programs

 Reduce provider payments
    Hospital payments

    Long term care providers

 Consolidate programs and simplify eligibility
      No more expansions in Health Care Access Fund while
       General Fund cannot support existing programs
 Reduce eligibility for parents in Medical Assistance
  to 100% Federal Poverty Level
 Maintain limited state safety net program for single
         County Services Reform

 Incent counties to consolidate and share services
 Consolidate administered programs to 15 regional
 Improve consistency, service options, and
  predictability for participating counties
 Designed to save money and to improve
  efficiencies and services

 Deliver services that the public expects
  Expand   number of licenses available online
   Strengthen and improve state data centers

   Finish building an integrated tax system

   Replace outdated accounting and procurement
 Match enterprise IT costs with longer term benefits
 Minimal Use of Fees and Revenues

 Minimal fee increases in the General Fund
     Tobacco Appropriation Bonds

 Creates nearly $1 billion in one-time funds to
  soften revenue shortfall
 Equal to roughly 50% of tobacco payments – little
  state risk
 Provides one-time funding for non-operating
        Federal Stimulus Package

 Assumes $920 million in direct state aid
 Understates potential amount, providing a cushion
  for the February forecast
 Budget will be updated once federal legislation
 Assume new federal money will be spread across
  Governor’s Cuts in FY 2009, Proposed
  FY 2010-11 Actions Solve the Deficits

     ($ millions)      FY08-09      FY10-11
Beginning Balance       $2,245            584
 Revenues               32,700       33,638
 Spending               34,361       33,611
 Cash Flow Acct            350            350
 Budget Reserve              0            250
Balance                   $234            $11
FY 2010-11 Biennial Budget

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