Terri Bonoff

Governor Unveils Supplemental Budget Proposal

The Minnesota Senate this week began to review Gov. Tim Pawlenty's supplemental budget proposal, aimed at balancing the state's $1.2 billion budget shortfall in the 2010-11 biennium.  About two-thirds of the Governor's plan relies on spending reductions, with the largest cuts coming in the area of local government aid and health and human services. These spending reductions include:

• $250 million in reductions to state government aids to local units of government
  $347 million in reductions to state health and human services programs
• $47 million in reductions to state higher education institutions
  $181 million in reductions to state agencies and other programs

The other third of the Governor's budget proposal would rely on $387 million in federal Medicaid dollars. The funding has not yet been appropriated and is currently being debated by Congress, as such there is no firm indication if or when the money will arrive. Both the Governor and Legislature are hopeful that this enhanced Medicaid funding will be approved. Yet the uncertainty does create political tension about this budget solution. As tough as these proposed cuts are, imagine how difficult it would be if we do not end up receiving the $387 million.

With the Governor's plan on the table, we have begun crafting our own budget proposal.  Legislative committees are already holding hearings on the Governor's plan and will spend several weeks putting together budget bills. I am hopeful that Senate and House leadership will work with the Governor to craft an honest and fair budget-balancing plan that puts the state on more solid financial footing. I believe that the proposed cuts in health and human services are of great concern.  The Governor sets forward $347 million in cuts that essentially leave 40,000 single adults without health insurance. I believe that is going in the wrong direction. Minnesota has long been a national model when it comes to health care. We have the least uninsured at the lowest cost. In these difficult economic times, it is more important than ever that we examine our values and reaffirm the commitments that have made our state so successful in the past. I will continue to work to ensure that the values and concerns of our district carry the day as I review policy. I hope you will continue to share those thoughts and concerns with me.

Education Bills Would Safeguard Education Aid

On Thursday, I presented two bills to the E-12 Budget Division that would help safeguard education aid in the future for Minnesota's school districts. The first bill would put into statute the $1.3 billion unilateral unallotment "shift" that Governor Pawlenty imposed last summer to address the state's multi-billion dollar budget shortfall for the 2010-11 Biennium. In the absence of legislative action, this shift (or deferment of payment to districts) could become a permanent cut. I was joined by Superintendent Dennis Peterson from Minnetonka Public Schools, Steven Waisbren - Board Chair of Lionsgate Academy Charter School, and Scott Croonquist - Government Liaison with the Association of Metropolitan School Districts, who all testified to the tremendous negative impact that such a cut would have on the schools that they work to support.

If the shift-ratification bill passes, a plan of repayment of the money to Minnesota school districts will be in place, based on a state law passed in 2004.  The last shift enacted by the Legislature about eight years ago took four cycles to repay. The shifts are repaid when the state's budget picture is positive.  Ratifying the shift would reduce the forecasted deficit by $1.2 billion for the coming two-year biennium. The Governor has recommended ratifying the shift in his 2012 budget.

I presented a second bill to the committee that would repeal a 1986 law requiring Minnesota Management and Budget to look to the positive cash reserves of school districts before going into short-term borrowing when faced with cash flow problems. As I have stated before, these fund balances are often derived using local taxes paid by homeowners and businesses and are intended to pay for education programs and expenses. Our local school boards and school administrators have worked hard to manage their budgets, pass referendums and secure positive cash reserves. It sends the wrong message to fiscally-responsible school districts that the state would look to their positive cash reserves in order to help balance the state budget.

Both bills were laid on the table for possible inclusion in a larger Education Omnibus bill.

August Primary Bill Passes Senate

As the state of partisanship takes center stage in Washington D.C., I was proud to see my colleagues on both sides of the aisle come together around a piece of legislation I authored this session to help ensure that military men and women are provided sufficient time to receive and return absentee ballots in our state's election system.

While Minnesota fares better than many other states, still roughly 32% of military and overseas ballots arrived too late to be counted in the 2008 election. The bill discussed on Monday was prompted by passage of the federal Military and Overseas Voters Empowerment Act (MOVE Act), which requires a 45-day absentee balloting period for federal elections.

This legislation will allow for such a timeline by moving up the date of the state's primary election to the second Tuesday in August in each even-numbered year. The bill passed off the floor of the Senate unanimously and will await action by the House of Representatives.

Haiti Earthquake Relief Donations Could be Deducted on 2009 Taxes

The Senate passed a bill this week that would allow Minnesota taxpayers to claim a deduction on 2009 income taxes for Haiti earthquake relief charitable contributions made in 2010.  Donations made after Jan. 11, 2010, and before March 1, 2010, would be eligible for the accelerated tax treatment. Congress passed a bill in January that will allow these contributions to be claimed as 2009 income tax or corporate income tax deductions; this legislation would treat such earthquake donations in the same manner for state tax purposes. This would affect businesses with tax years ending on Dec. 31, individuals who itemize their deductions, as well as individuals who utilize the non-itemized charitable contribution subtraction.

The same standards that apply to other charitable contributions will be required to claim this deduction. However, an exception to the record-keeping requirement is allowed if a telephone bill with relevant information is provided. That is to account for the "text-message" contributions promoted by the Red Cross and other organizations.

The Minnesota Department of Revenue expects at least 900,000 taxpayers could benefit from this legislation, if passed. The bill is also moving through the House and is expected to be sent to the Governor as soon as it passes that body.

GAMC Bill Passes House and Senate

On Feb. 11, the Senate passed a bill to restore health care services through the General Assistance Medical Care program (GAMC). The bill went on to receive an overwhelming majority vote 125-9 in the House of Representatives on Thursday, and the Senate quickly concurred with the technical amendments added to the bill by the House and passed the bill again on a bi-partisan basis.

GAMC is a state-funded program for the poorest of the poor that provides health care for over 70,000 childless adults every year.  The Governor vetoed all funding (approximately $381 million) for the program for FY 2011.  He subsequently unalloted funding for March 1-July 1, 2010, resulting in an additional $15 million cut.

Late yesterday, the Governor announced he would veto the GAMC legislation. I remain very concerned by the elimination of this program. These are some of our most vulnerable Minnesotans. Those on the program make less than $8000/year and many have mental illness and/or chemical dependency issues.  Thousands are veterans.  The governor signaled last Session in his veto message that he wanted the Legislature to come up with a solution and pass it early in the session. I am hopeful that we can craft a compromise quickly that will allow these Minnesotans to have access to the care that they require.

Warm regards,