Minnesota state budget

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Minnesota Gov. Tim Pawlenty stood his ground by closing Minnesota’s budget deficit without raising taxes.^[1] The Minnesota State Legislature passed the FY 2010 budget; however the governor used his unallotment power to modify it and presented the budget changes that went into effect July 1, 2009.^[2] Gov. Pawlenty vetoed $1 billion in tax increases passed by the Legislature during its 2009 Session. Instead of calling for a special session, Gov. Pawlenty utilized the "unallotment" powers of his office to cut spending and balance the state budget for FY 2010 and FY 2011 without tax increases.^[3]

Gov. Pawlenty's executive actions announced June 16, 2009 effective July 1, 2009 include:

• $200 million Reduction of local aids and credits to cities & townships
• $100 million Reduction of local aids and credits to counties
• $67 million Reduction of refunds and other payments
• $236 million Reduction in human services spending
• $100 million Reduction in higher education appropriations
• $33 million Reduction in most state agency operating budgets
• $1.77 billion K-12 education payment deferrals and adjustments
• $169 million Additional revenues through administrative actions

TOTAL: $2.675 billion

Minnesota Consolidated Budget in Billions (After Governor's Executive Actions June 2009):^[4]

Year	2007 Actual	2008 Actual	2009 w/7-09 Ex. Act.	2010 w/7-09 Ex. Act.	2011 w/7-09 Ex. Act.	2012 Pln. Est.	2013 Pln. Est.
Revenue	$29.7	$31.3	$33.3	$32.7	$32.4	$30.8	$29.0
Total Exp. & Trans.	$25.2	$26.9	$30.6	$30.2	$29.8	$31.2	$30.2
Annual Balance	$4.5	$4.4	$2.7	$2.5	$2.6	-$0.3	-$1.2
Carried forward deficit	-$2.7	-$2.9	-$2.0	-$2.0	-$2.0	-$2.1	-$2.3
Budgetary Balance	$1.8	$1.5	$0.7	$0.5	$0.6	-$2.4	-$3.5

The Legislature will be able to review Gov. Pawlenty's unallotments when it convenes on February 4, 2010,^[5] but will be constrained by ongoing decreasing revenues and an estimated $5.9 billion deficit for the FY 2012/2013 biennium.^[6] Minnesota's Management and Budget Office's First Quarter FY 2010 Revenue Report released October 2009 shows:^[7]

• Individual income tax revenue July-September 2009 down 5.4%, $93 million from end of 2009 Legislative Session estimates
• Sales tax receipts July-September 2009 down 2.3%, $20 million from end of 2009 Legislative Session estimates
• Corporate income tax revenue July-September up 41.1%, $52 million from end of 2009 Legislative Session estimates
• Motor vehicles tax revenue July-September up 25%, $4 million from end of 2009 Legislative Session estimates
• Other revenues up 1.1%, $4 million from end of 2009 Legislative Session estimates

Total Revenues for the 1st Quarter FY 2010 1.7%, $52 million below end of 2009 Legislative Session estimates

[edit] Budget Background

Minnesota operates on a biennium, covering two fiscal years at a time. A fiscal year begins on July 1 and ends on June 30 of the following year, however the biennium begins July 1 of odd-numbered years. The process of creating a new state budget begins in even-numbered years. All state agencies submit budget requests for the next biennium along with actual expenditures and receipts for the two most recent fiscal years. The Governor then submits a three-part budget to the Legislature. Part one is a budget message, part two a detailed operating budget, and part three a capital expenditures budget. Parts one and two are presented to the legislature in January or February of odd-numbered years and part three is presented to the legislature in January of even-numbered years. Both the House and the Senate examine, modify, and enact the final budget. ^{[8] [9]}

Minnesota's “unallotment” law^[10] specifies conditions under which the executive branch can reduce expenditures to prevent an anticipated budget deficit. The key part of the law provides:^[11]

• (a) If the commissioner [of finance] determines that probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the biennium will be less than needed, the commissioner shall, with the approval of the governor, and after consulting the legislative advisory commission, reduce the amount in the budget reserve account as needed to balance expenditures with revenue.
• (b) An additional deficit shall, with the approval of the governor, and after consulting the legislative advisory commission, be made up by reducing unexpended allotments of any prior appropriation or transfer. Notwithstanding any other law to the contrary, the commissioner is empowered to defer or suspend prior statutorily created obligations which would prevent effecting such reductions.

[edit] Budget figures

The following table provides a history of Minnesota's expenditures and gross domestic product (GDP).

Fiscal Year	Expenditures (billions)	GDP (billions)
2000	$35.4 [12]	$185.1 [12]
2001	$38.0 [12]	$190.2 [12]
2002	$40.5 [12]	$198.6 [12]
2003	$41.3 [12]	$208.2 [12]
2004	$42.1 [12]	$223.5 [12]
2005	$42.9 [12]	$232.0 [12]
2006	$44.8 [12]	$242.1 [12]
2007	$46.7 [12]	$255.0 [12]
2008	$48.7 [12]	$268.5 [12]
2009	$50.8* [12]	$282.8* [12]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
• See Minnesota state budget (2008-2009) for more details.

[edit] Accounting Principles

Minnesota auditing authority is divided between the State Auditor and the Legislative Auditor. The Office of the State Auditor is a constitutional office that is charged with overseeing more than $20 billion spent annually by local governments in Minnesota, publishing their audit reports online. The Office of the Legislative Auditor audits state agencies and constitutional offices, and also publishes their audit reports online.^[13]

Rebecca Otto was elected Minnesota State Auditor in 2006.^[14] Jim Nobles has been the Legislative Auditor for the State of Minnesota since 1983, an appointed position under the Legislative Audit Commission. In addition to the office's primary focus on state agencies and programs, they also audit three metropolitan agencies and selectively review programs that are administered locally.^[15]

The Institute for Truth in Accounting (IFTA) rates Minnesota “Timey” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Minnesota's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[16] Minnesota's CAFRs are published online by the Minnesota Management and Budget Agency (MMB). Tom J. Hanson has been the Commissioner of the Minnesota Management and Budget Agency since 2006. MMB’s area of responsibilities include:^[17]

• Accounting
• Bonding
• Budget
• Economic Forecasts & Updates
• Treasury

Credit Rating	Fitch	Moody's	S&P
Minnesota[18]	AAA	Aa1	AAA

[edit] Economic Stimulus Package

Minnesota is expected to receive $4.6 billion from the $787 billion dollar economic stimulus. ^[19] All told, the federal stimulus plan would create or save 66,000 jobs in Minnesota, based on White House estimates. ^[20]
For more information on how the federal stimulus funds are being used in the state of Minnesota, visit the state recovery website.

According to preliminary reports Minnesota is expected to receive: ^[19]

• $29 million in law-enforcement aid ^[21]
• $131 million for weatherization projects for low-income homes ^[22]
• $54 million for the State Energy Program ^[22]
• $1.8 billion for Medicaid programs
• $800 million towards schools
• $500 million towards roads and bridges.

[edit] Budget transparency

Disregarding the mandate of Minnesota House File 548, State Government Omnibus bill (2007), Minnesota did not launch a spending database until March 2009 (over one year after the mandated launch date).^[23][24] According to an article in the Star Tribune, the Department of Administration had not launched the website because "An old state computer system, which is being updated, is not Internet-friendly. It's not clear if the new computer system will include a spending database because the Legislature didn't appropriate the $1 million to $1.5 million needed for it."^[25]

The actual expense of building the site was far less than initially expected. Curt Yoakum, Legislative Liason for the Department of Management and Budget in 2009, said that the spending database was developed with existing resources and a mere $5,000 consulting fee. Apparently the $1 million plus estimate was a bit high. The site's designers even overcame an antiquated accounting system that appeared unsuited to internet.

According to a press release from the Office of the Governor, "The site was created by Minnesota Management and Budget (MMB) and offers on-line, round-the-clock access to data on state payments for schools, local governments, contractors and other vendors. With just a few clicks, citizens can access detailed information on most state spending. The data is supplied by the state's accounting system and updated nightly."^[23] Check it out by clicking here.

The Minnesota Office of Grants Management has made this website, where individuals can find out grants that are available.

Additionally, the Minnesota State Arts Board lists the recipients of its awards.^[26] 2008 Media Grants, for example, were distributed to twelve individuals and cost a total of $59,000. They included grants for projects such as:

• Nathaniel H. Freeman, Minneapolis

$6,000 — for a sixteen-stage video installation that shows the opening scene of sixteen imagined narratives, all informed by the people and events of his northeast Minneapolis neighborhood

• Heather R. Johnson, Minneapolis

$5,000 — for a documentary film, titled, “No Ugly Trees,” that explores women's body and self-esteem issues

• Daniel J. Lundquist, Bloomington

$5,000 — for creative time to finish hand coloring “Boris,” an animation about overcoming difficult circumstances to live a happy life^[27]

[edit] Legislation

• Minnesota House File 548, State Government Omnibus bill

HF 376 and SF 416 were incorporated into Minnesota House File 548, State Government Omnibus bill, which was signed by Governor Tim Pawlenty on May 25, 2007. Starting in 2008, residents should have been able to search for information on state grants and contracts valued at over $25,000; however, the transparency database was not launched until March 2009. Grants and contracts to local government units will NOT be included in this database. According to the legislation, information would have been stored on the Web site for 10 years.

Prior to the passage of Minnesota House File 548, State Government Omnibus bill, a report by the Minnesota Office of the Legislative Auditor found that the policies and practices used to award and administer grants to nonprofit organizations were "inconsistent and inadequate to ensure accountability."^[28] According to the report, Minnesota paid $4.7 billion to nonprofits in 2005, most of which went to hospitals, health plans and large institutional providers. Of that amount, state or county agencies awarded $1 billion to nearly 1,900 nonprofits.

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
TAP Minnesota

[edit] Limitations and Suggestions

Minnesota's "Transparency and Accountability Project" site lacks information about state employee salaries

[edit] Support for the creation of the database

In response to a letter from the National Taxpayers Union,^[29] Chief Commissioner Dana Badgerow wrote a letter^[30] that attributed the delay in posting the database to a lack of funding. While the legislature passed the bill itself, it failed to appropriate a source of funding for the project.

The Minnesota Free Market Institute supports transparency in local government spending, writing "When local governments receive state money both as "Local Government Aid" and in special state financed bonding projects as well as through local property taxes, it's important that citizens get the complete picture of how all their tax monies are being spent at all levels of government, not just the top."

[edit] Public employee salary information

• The Minnesota Transparency and Accountability Project has provided some information about government employee salaries here.

• The St. Paul Pioneer Press has posted a database of over 54,000 state and local government salaries as part of its Data Planet page.

• A listing of the Minnesota state payroll from 2009 is posted here.

[edit] Economic Stimulus Transparency

• The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[31]

• Minnesota will receive an estimated $2,514,686,494 ^[32]

• The economic recovery website to show how legislators and government officials in Minnesota are spending Federal funds is available here.

[edit] See Also

Minnesota taxpayer-funded lobbying

[edit] External links

[edit] References

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