Minnesota state budget (2010-2011)

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Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government online.[1]

As of May 10, 2010, the state of Minnesota faced an estimated $1.2 billion budget deficit for the FY 2010 budget[2] and a nearly $3 billion budget shortfall overall.[3]

Going into the fiscal year, Minnesota had a total state debt of $21,206,734,818 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.[4]

Fiscal Year 2011 State Budget

With the stimulus package passed in August 2010, the state was set to receive $263 million in Medicaid funds and $167 million for schools. Officials said that the money for education would save more than 2,300 jobs.[5]

2011 State spending & deficit in billions[6]
Total spending Pension Healthcare Education Welfare Protection Transport Debt Budget gap
$20 $3.5 $10.6 $0.5 $3.4 $1.4 $1.7 $9.4 $3.1
2011 Local spending & deficit in billions[6]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$24.0 $0.4 $2.1 $9.9 $2.3 $2.7 $3.1 $31.6

Cash Crunch

Tom Hanson, Management and Budget Commissioner and the governor's top finance adviser, told lawmakers Sept. 7, 2010, that the state could have to borrow from the line of credit in December 2010 if then-current cash-flow projections held.[7] To prevent the cash crisis, the administration put off $141 million in payments to 134 school districts, deferred $89 million in aid to the University of Minnesota and delayed $221 million worth of tax refunds to Minnesota businesses until January.[7] The school districts stated they would be forced to tap their own reserves or borrow money to pay their bills.[8]

The state's tax revenues were $55 million more than expected from July through September 2010.[9] An economic update released by Minnesota Management and Budget in Oct. 2010 showed that Minnesota was running $22 million behind for the full two-year cycle that runs through June 2011.[9]

Federal Funds

Minnesota received approximately $430 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[10][5] The governor waited until Sept. 8, 2010, to confirm that he would accept the $230 million in Medicaid funds that were part of the federal funds he had previously referred to as a "reckless spending spree."[11]Cite error: Closing </ref> missing for <ref> tag The veto gave the legislature under one week to address the budget deficit.[12] The vetoed bill included a new income tax bracket for couples earning more than $200,000 a year, and the governor's veto of the Democrat's proposed tax increase was his third in four years.[12] The Senate narrowly passed the measure 34-33 and the House of Representatives voted 71-63 for the budget balancing bill.[12]

Minnesota lawmakers approved $312 million in cuts to local governments, public colleges, farm programs and more after agreeing with Gov. Tim Pawlenty on the outlines of a partial deficit-reduction plan.[13] The bill addressed one third of the state's projected $1 billion budget deficit.[13] Legislators anticipated that additional federal funds would be headed toward the state and were anticipating a relatively small gap to confront before their constitutionally mandated May 17 adjournment.[13]

Local government allowances were cut by $105 million, and while that was the largest blow in the bill, it was less than the $250 million cut sought by Gov. Pawlenty.[13] Additional cuts included[13]:

  • $47 million less for the state's universities and colleges
  • postponing a $260,000 upgrade to its dairy inspection and food monitoring system
  • $555,000 cut to the tourism promotion office
  • $770,000 less to the Historical Society

The Minnesota Supreme Court ruled that Gov. Pawlenty overstepped his authority by unilaterally cutting state funding for a small nutrition program before the budgeting process was complete but after the legislature had adjourned.[14] The governor's action was known as "unallotment."[15] The decision raised the possibility that others affected by the governor's $2.7 billion budget reductions could sue to had their eliminated funds restored.[14] Gov. Pawlenty called an emergency cabinet meeting on May 7, 2010 to plan possible reductions in state services if a court ordered the state to make such payments, which it could not afford.[14] Before the court ruling, Pawlenty and the Democratic-Farmer-Labor-controlled Legislature were making slow progress toward solving a $536 million budget deficit but the possibility of having to restore funding when the state did not had the money to did so threw a wrench into the budget plans.[14]

On May 8, 2010, Gov. Pawlenty threatened to shut down the state government if the legislature did not come to an agreement on a new FY2011 budget.[3]

Minnesota received approximately $430 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[10][5] The governor waited until Sept. 8, 2010, to confirm that he would accept the $230 million in Medicaid funds that were part of the federal funds he had previously referred to as a "reckless spending spree."[16][17]

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 was a budget message, part two a detailed operating budget, and part three a capital expenditures budget. Parts one and two were presented to the legislature in January or February of odd-numbered years and part three was presented to the legislature in January of even-numbered years. Both the House and the Senate examine, modify, and enact the final budget.[18][19]

Minnesota's “unallotment” law[20] specifies conditions under which the executive branch can reduce expenditures to prevent an anticipated budget deficit. The key part of the law provides:[21]

  • (a) If the commissioner (of finance) determines that probable receipts for the general fund would be less than anticipated, and that the amount available for the remainder of the biennium would 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 was empowered to defer or suspend prior statutorily created obligations which would prevent effecting such reductions.

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[22] $185.1[22]
2001 $38.0[22] $190.2[22]
2002 $40.5[22] $198.6[22]
2003 $41.3[22] $208.2[22]
2004 $42.1[22] $223.5[22]
2005 $42.9[22] $232.0[22]
2006 $44.8[22] $242.1[22]
2007 $46.7[22] $255.0[22]
2008 $48.7[22] $268.5[22]
2009 $50.8*[22] $282.8*[22]
  • NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.


Accounting principles

See also: Minnesota government accounting principles

Minnesota auditing authority was divided between the State Auditor and the Legislative Auditor. The Office of the State Auditor was a constitutional office that was 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.[23][24][25]

Rebecca Otto was elected Minnesota State Auditor in 2006.[26] Jim Nobles had been the Minnesota Legislative Auditor 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 were administered locally.[27][28]

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).[29][30] According to an article in the Star Tribune, the Department of Administration had not launched the website because "An old state computer system, which was being updated, was not Internet-friendly. It's not clear if the new computer system would include a spending database because the Legislature didn't appropriate the $1 million to $1.5 million needed for it."[31]

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 was supplied by the state's accounting system and updated nightly."[29]

The Minnesota Office of Grants Management had made a website where individuals can find out grants that were available.[32]

Additionally, the Minnesota State Arts Board listed the recipients of its awards.[33] 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[34]


Government tools

The following table was 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 Y
600px-Yes check.png
N
600px-Red x.png
Y
600px-Yes check.png
N
600px-Red x.png
{{{1}}}
N
600px-Red x.png
See also: Evaluation of Minnesota state website

Limitations and Suggestions

Minnesota's "Transparency and Accountability Project" site lacked information about state employee salaries.[35]

Public employee salary information

See also: Minnesota state government salary
  • The St. Paul Pioneer Press had posted a database of over 54,000 state and local government salaries as part of its Data Planet page.[36]
  • A listing of the Minnesota state payroll from 2009 was posted here.

Economic stimulus transparency

Minnesota would receive approximately $448 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[10][37]

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 was estimated that 69%, or over $541 billion, would be administered by state governments.[38] Minnesota would receive an estimated $2,514,686,494[39]

Reports show that there were 65 bonding projects had borrowed $684 million in stimulus bonds.[40] The Freedom Foundation of Minnesota had found that some of these projects include: municipal swimming pools, a multi-million dollar golf course renovation and a new mega-community center.[40]

One Minnesota project was noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. One project gave the towns of Woodbury and Eagan, Minnesota $1.8 million in stimulus funds for the heating systems at the local ice rinks.[41]

Another project that came under fire was the $5 million in funds to renovate the St. Cloud Regional Airport, which was not flying commercial traffic due to low demand.[42]

See also

External links

Additional reading

References

  1. FY 2011 CAFR
  2. Star Tribune, "Legislature returns, staring into the teeth of $1.2B deficit," February 4, 2010
  3. 3.0 3.1 KSFY.com "Pawlenty Threatens State Government Shutdown" May 8, 2010 (dead link)
  4. State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  5. 5.0 5.1 5.2 The Minneapolis Start Tribune "Obama signs $26B stimulus package -- $430M for Minn." Aug. 10, 2010
  6. 6.0 6.1 USA Spending, State Guesstimated* Government Spending
  7. 7.0 7.1 Businessweek "Governor: Minnesota 'unlikely' to tap credit line" Sept. 9, 2010
  8. The Minneapolis Star Tribune "State taps schools for another $142 million" September 25, 2010
  9. 9.0 9.1 Businessweek "Minn. tax revenues up $55M for most recent quarter" Oct. 11, 2010
  10. 10.0 10.1 10.2 Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  11. The Minneapolis Star Tribune "Pawlenty to feds: We'll take the cash" Sept. 7, 2010
  12. Cite error: Invalid <ref> tag; no text was provided for refs named veto
  13. 13.0 13.1 13.2 13.3 13.4 Business Week "Minn. lawmakers sign off on $312M in budget cuts"March 30, 2010
  14. 14.0 14.1 14.2 14.3 Pioneer Press "If you thought the state's budget was shaky before ..." May 6, 2010
  15. Twin Cities Daily Planet "Unallotment undone" May 9, 2010
  16. The Minneapolis Star Tribune "Pawlenty to feds: We'll take the cash" Sept. 7, 2010
  17. H.R. 1586
  18. Minnesota Legislative Reference Library, "Resources on Minnesota Issues State Budget," December 2008
  19. Minnesota Management and Budget, "2010-11 Governor's Budget Instructions & Forms," accessed March 18,2009
  20. Minnesota Office of the Revisor of Statutes, "Minn. Stat. § 16A.152, subd. 4.," accessed October 27, 2009
  21. Minnesota House of Representatives Research Department, "Unallotment: Executive Branch Power to Reduce Spending to Avoid a Deficit," March 2008
  22. 22.00 22.01 22.02 22.03 22.04 22.05 22.06 22.07 22.08 22.09 22.10 22.11 22.12 22.13 22.14 22.15 22.16 22.17 22.18 22.19 US Government Spending, "Minnesota State and Local spending," accessed March 17,2009
  23. Minnesota Office of the State Auditor Web site, accessed October 27, 2009
  24. audit reports
  25. audit reports
  26. Minnesota Office of the State Auditor Web site, accessed October 27, 2009
  27. Minnesota Office of the Legislative Auditor Web site, accessed October 27, 2009
  28. Legislative Audit Commission
  29. 29.0 29.1 Office of the Governor, "GOVERNOR PAWLENTY UNVEILS NEW STATE WEBSITE TO ALLOW CITIZENS TO TRACK GOVERNMENT SPENDING ONLINE," March 26, 2009
  30. Minnpost.com, "Many states, including Minnesota, lag in putting their spending on the Internet," February 27, 2009
  31. Star Tribune, "A blogger's quest: Where's the database?" May 15, 2009
  32. Minnesota Office of Grants Management
  33. Minnesota State Arts Board website
  34. 2008 Grant Recipients, Artists Initiative
  35. Minnesota's "Transparency and Accountability Project" site
  36. Data Planet: state and local government salaries
  37. Cite error: Invalid <ref> tag; no text was provided for refs named HR1586
  38. National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
  39. Wall Street Journal, "Stimulus Spending by State," March 12,2009
  40. 40.0 40.1 Minnesota Communities go on Spending Spree Funded by Stimulus Bonds, July 28, 2010
  41. "Summertime Blues, 100 stimulus projects that give taxpayers the blues" August 2010
  42. Watchdog, Minnesota Airport had $5 Million Airport Terminal But No Place to Go, Sept. 27, 2010