1. 1 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Minnesota State Budget: A Brief Overview February 13, 2014 Presented by: Eric L. Nauman, Minnesota Senate Fiscal Staff Minnesota Senate, Office of Counsel, Research and Fiscal Analysis

2. S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Role of Legislative Fiscal Staff Analyze spending and revenue proposals, including modeling of many proposed education and tax law changes. Request and interpret Fiscal Notes and Revenue Estimates; interface with state agencies to ascertain information in support of the policy process. Draft budgetary legislation. Track budget proposals and decisions using Spreadsheets. Support legislative oversight of enacted budgets. 2

3. O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budget Overview 3

4. O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budget Overview 4

5. FY 2013FY 2014FY 2015 July 1, 2013July 1, 2014 Legislative session Governor’s biennial budget submission Legislative session FY 2014-15 biennial budget enacted Legislative session November 2012 Forecast February 2013 Forecast November 2013 Forecast February 2014 Forecast February 2015 Forecast November 2014 Forecast Governor’s capital budget submission FY 2014-15 supplemental budget actions enacted O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS The Biennial Budget Calendar 5

6. 6 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budget Forecasting Forecast completed by MMB twice per year — Nov Fcst completed by end of first week in December; Feb Fcst complete by end of Feb. (Feb 28, 2014) Current Law Forecast — Measures the cost of spending and revenues collected based on current law — Allows reasonable assumptions of projected growth in national and state economies and affected populations. — Revenues must be estimated for all sources. Time period forecasted — MN makes biennial budgets — Forecasts in first year of biennium measure current biennium and next biennium. (FY 2014-15 & FY 2016-17) — Forecasts in second year of biennium measure current biennium, and next two biennia. (so, next year FY 2014-15, FY 2016-17, & FY 2018-19)

7. 7 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS General Fund Budget Forecast Current Biennium (FY 2014-15) — $825.2 million positive balance after paying off budget reserves, cash flow, & shifts. FY 2016-17 — $2.3 billion positive balance after carryforward.

8. 8 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS General Fund Budget Forecast November 2013

9. 9 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS General Fund Budget Forecast November 2013

10. 10 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budgetary Balance Over Time

11. 11 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Capital Investment – The Process Capital Investment & State Bonding is one of the ways that the state pays for long-term public projects. (Must be paid back in 20 years or less.) Primary purpose of bonds is to acquire and better public land and buildings. -- Typically used for fixed assets such as land or buildings. -- Fixed asset must be long-lived, useful life should be at least ten years. -- Projects should be publically owned. Agencies and local goverments submit requests by July 15 of odd numbered years; Governor makes recommendation to legislature by January 15 of even numbered year. Governor has requested $986M of projected in 2014 session -- 28% statewide programs, 38% seven-county metro area, 34% greater MN -- 27% education, 24% economic development, 15% environment, 13% capitol restoration. Three-fifths vote required. (Minn Const., Art XI, sec. 5) -- 41 votes in Senate; 81 votes in House of Representatives.

12. 12 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Capital Investment Request for Minneapolis Under Consideration Total requests for Minneapolis-based projects = $93.0M. Requests focus on asset preservation and improvement, land acquisition, building renovation. Many projects include Minneapolis Park and Rec Board projects. The largest single project is predesign/reconstruction for Nicollet Mall -- $25.0M; Franklin Ave bridge request for $11.7M. Governor’s capital request includes $27.0M for Minneapolis; Includes $20.0M for Nicollet Mall and $7.0M for sculpture garden & Cowles conservatory renovation. Next step will be legislation from House and Senate, conference committee negotiation, and final agreement.

13. 13 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Wrap-up/Questions Presented by: Eric L. Nauman Lead Fiscal Analyst Eric.Nauman@senate.mn 651-296-5539

14. 14 O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Where To Get Other Information This Briefing http://www.senate.mn/departments/scr/presentations/index.php#header Senate Budget Tracking Spreadsheets http://www.senate.mn/departments/fiscalpol/tracking/index.php?ls=#header November 2013 Forecast http://www.mmb.state.mn.us/nov-2013-forecast 2013 Senate Counsel, Research and Fiscal Analysis Fiscal Review http://www.senate.mn/departments/scr/freview/2013/fiscal_review.pdf