Legislators toil away on the budget deficit
Published 1:00 pm Saturday, April 3, 2010
When session began eight weeks ago, we identified job creation and balancing the budget as two of our top priorities. In the eight weeks since we started, by working together and working quickly, we have made good progress on both of these goals.
The House decided to tackle the budget deficit in three parts, focusing first on areas where we could reach agreement with the Senate and the Governor, and where we could reduce government. This week, we passed the first segment, cutting $313 million, about one-third of the total deficit.
The breakdown of House budget cuts by category are as follows:
Email newsletter signup
Higher education: $52.5 million
Agriculture: $7.0 million
Environment and natural resources: $16.3 million
State government: $32.7 million
Transportation: $5.6 million
Cultural and outdoor heritage: $2.5 million
Energy: $49.8 million
Housing and public health: $6.5 million
Local government aid: $105 million
This bill demonstrates painstaking work and tough decisions. Since 2002, our state has faced a budget deficit in every year but two. Everything from funding for local governments, schools, nursing homes, hospitals and public safety has been cut repeatedly. We made the necessary decisions in this plan, but we worked hard to protect jobs, public safety and core services our residents depend on.
The biggest difference between the House budget and Gov. Tim Pawlenty’s plan is the difference in cuts to local government aid. The House plan cuts $325 million over three years compared to $1.14 billion proposed by the governor over the same time period. We wanted to limit those cuts, determined to protect fire and police departments, city infrastructure, and property owners from more increases.
Soon we will have more details about federal money our state will receive as a result of passage of the federal health care reform bill and the federal jobs bill. This number could go as high as $700 million, with a state match required for about $300 million. This funding, which the governor has also built into his budget plan, has the potential to greatly limit the cuts to the Health and Human Services Budget.
Our goal to create jobs was first addressed by swift passage of a capital investment bill. Several weeks ago, we reached an agreement on bonding legislation (HF2700) that will get thousands of Minnesotans back on the job. We passed that bill and the governor signed it into law.
We all know just bonding for construction projects won’t get everyone back to work. This week, we passed another jobs bill that will create as many as 12,000 jobs statewide, primarily in the private sector. This legislation will enact common sense tax reforms and other economic incentives that will spur new jobs in bioscience, manufacturing, construction, and the emerging clean energy economy.
The bill includes the Angel Investment Credit, which will provide a 25 percent credit for investments made in qualifying business. The Historic Credit allows for a 20 percent state credit to match a federal credit available for historic structure rehabilitation for certified historic projects.
Tax-increment financing was also expanded for local projects across the state. TIF creates funding for “public” projects that may otherwise be unaffordable to cities by borrowing against future property tax revenues. It is projected the value of the property will increase once it’s developed, and the future gains in taxes will be used to finance the current improvements. Several TIF provisions will spur construction projects and job growth across Minnesota.
The final versions of both of these bills were shaped by what the governor indicated he would sign into law. There are some provisions I would change if I could, but an assurance the bills will actually be enacted carries a lot of weight.
When we return next week, we will continue our work on the state budget deficit. Please continue to contact me with your questions and suggestions addressing our state budget shortfall. I can be reached at (651) 296-8216 or by email at firstname.lastname@example.org. I look forward to hearing from you.
Robin Brown, DFL-Moscow Township, is the state representative for District 27A.