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FY 2010-11 BIENNIAL BUDGET STATE OF MINNESOTA Governor Tim Pawlenty All budget documents can be found at www.mmb.state.mn.us.

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Presentation on theme: "FY 2010-11 BIENNIAL BUDGET STATE OF MINNESOTA Governor Tim Pawlenty All budget documents can be found at www.mmb.state.mn.us."— Presentation transcript:

1 FY BIENNIAL BUDGET STATE OF MINNESOTA Governor Tim Pawlenty All budget documents can be found at

2 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)

3 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)

4 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

5 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 budget gap by nearly half

6 Budget Bottom Line General Fund Expenditures FY 08-09$34.36 billion FY 10-11$33.61 billion Difference-2.2% ($750 million)

7 Governor’s Budget Solution: $4.8 billion deficit Shortfall for FY10-11 ($ millions) ($4,847) Spending Cuts, Savings2,521 Other Resources3,197 Tax Cuts, Initiatives, Reserve(860) Total Recommendations$4,858 Balance$11

8 Budget Solution: Spending Cuts, Savings Proposed Changes ($ millions): Impact Permanent Spending Cuts$2,368 Health Care Access Fund & other153 Subtotal$2,521

9 Budget Solution: Other Resources Proposed Changes ($ millions):Impact Federal stimulus placeholder$920 K-12 payment shifts1,294 Tobacco appropriation bonds (net)983 Subtotal$3,197

10 Budget Solution: Tax Cuts, Initiatives, Reserve Proposed Changes ($ millions): Impact New Spending Initiatives$323 Tax Cuts Budget Reserve Subtotal$860

11 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 accountability

12 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

13 Transforming K-12 Education Increase K-12 funding, even in a budget crisis 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

14 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

15 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 achievement

16 General Fund Spending $ Billion Governor’s Proposed FY10-11 Budget

17 All Operating Funds Spending $ Billion Proposed FY10-11 All Funds Budget

18 FY08-09 vs. Proposed FY10-11 ($ millions)FY 08-09Gov 10-11% Chg. K-12 Education*13,79714, Higher Education3,0992,845(8.2) Local Aids, Prop. Tax Credits3,0622,897(5.4) Health & Human Services**10,32811, Debt Service/Capital Projects***883114(87.1) All Other Omnibus areas3,9193,555(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

19 Forecast vs. Proposed FY10-11 Budget ($ millions) Forecast FY10-11 Governor FY10-11 % Chg. K-12 Education*13,90314, Higher Education3,1582,845(9.9) Property Tax/Local Aids3,4192,897(15.3) Health & Human Services**12,62711,324(10.3) Debt Service/Capital Projects***1,097114(89.6) All Other Omnibus areas3,6203,555(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

20 Plan Substantially Reduces FY Gap ForecastGovernor ($ millions)FY12-13 Revenues34,55835,367 Spending39,16237,903 Projected Gap$(4,604)$(2,536)

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

22 Health Care Programs Reduce provider payments  Hospital payments  Long term care providers Consolidate programs and simplify eligibility requirements  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 adults

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

24 Technology 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 system Match enterprise IT costs with longer term benefits

25 Minimal Use of Fees and Revenues Minimal fee increases in the General Fund

26 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 obligations

27 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 known Assume new federal money will be spread across FY09-11

28 Governor’s Cuts in FY 2009, Proposed FY Actions Solve the Deficits ($ millions)FY08-09FY10-11 Beginning Balance$2, Revenues32,70033,638 Spending34,36133,611 Cash Flow Acct350 Budget Reserve0250 Balance$234$11

29 ALL BUDGET DOCUMENTS CAN BE FOUND AT S FY Biennial Budget


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