Viewpoint: Time to get real about budget solutions
As the end of the Legislative session approaches, I work in the hope that the House, Senate and Governor will come together and agree to a budget in the best interest of our state.
A divide remains to be bridged, and those on both ends of the political and leadership spectrum remain in denial about budgetary and economic realities.
The denial, driven by both differing world views and political expediency, is most evident in the dueling revenue and tax proposals.
While cutting more from programs and budgets than the Governor, the Democrats remain in denial about tax and business climate issues.
While many Republicans fail to understand the extent to which the Governor is borrowing rather than cutting to fill the budget hole, leaving us with multi-billion dollar deficits into the future.
Nor are they acknowledging that cuts much greater than those already proposed would have dire consequences for many sectors of our economy and the institutional fabric of our state.
In the first round of proposals, the Governor, the House and the Senate all brought cuts, reforms, and revenues to the table to address the $6.4 billion budget shortfall.
The Governor proposed $1.5 billion in cuts, while the House and Senate proposed $1.6 and $2.4 billion respectively.
As part of their budget balancing plan, the House leadership put together a tax proposal that would raise $1.5 billion in new revenues. I voted against the proposal for several reasons.
First, it did not represent a balanced approach that could garner bi-partisan support or get past the Governor's veto pen. Second, it contained specific provisions and reforms that I don't agree will necessarily ensure a more progressive tax code for our state. And third, it did not go far enough to address business climate issues.
I support a fairer tax code, but I also support the Governor's proposals to phase in reforms to improve our business tax climate.
The Governor fills the $6.4 billion dollar hole with $4.9 billion in one-time monies, and then drops us off a cliff in the next biennium to face yet another multi-billion dollar deficit.
Is this the new fiscal conservatism? Make promises to leave whole categories of the budget unharmed during the greatest fiscal challenge we have ever faced, and then try to deliver on these promises through irresponsible borrowing?
The Governor finds one-time money through a combination of federal stimulus dollars, borrowing $1.3 billion back from school districts, and issuing $1.1 billion in appropriation bonds to make payments on existing state debt. This level of borrowing, and the types proposed, is unprecedented for our state, and unsound.
When borrowing back from the school districts the Governor claims to leave unharmed by the cuts, school districts will be forced to tap their reserves and/or borrow on capital markets to address the cash flow problem.
The Minnesota Association of School Business Officials estimates this borrowing will cost districts at least $33 per pupil in interest charges, which is over half a percent on the school formula.
Issuing $1.1 billion in appropriation bonds will mean annual repayment from the General Fund of $100 to over $170 million per biennium over the next 20 years (Minnesota borrows $1 billion and has to pay back over $1.5 billion); this translates into future cuts or increases in taxes.
The Department of Revenue estimates the Governor's proposal will increase property taxes by over $600 million increase over the next three years just to cover the cuts of aid to counties and cities.
This does include normal cost of living increases counties and cities will need to cover current expenses.
It's time to get real. At a minimum, the Governor's budget is still short over a billion dollars, and that is not taking into account that he also permanently raids the Health Care Access Fund and ends MinnesotaCare.
On April 23, the House voted down the Governor's $1.1 billion appropriation bonding proposal on a 130 to 2 bi-partisan vote. In a recent legislative survey, my constituents also strongly opposed more borrowing to balance the budget.
Conservatives in the House and those I am hearing from in my district have yet to acknowledge that perhaps there is a reason the Governor and his top executives have not proposed even more cuts.
Perhaps it wouldbe bad, very bad, for our state -- for our children, for our seniors, for our hospital systems, for protection of our environment, for protection of our health, and that much greater cuts would impose a level of harm from which it would be difficult for individuals, institutions and the state to recover once the current recession has passed.
For many, then would be too late. This is the nature of the real challenge before us in these final days and weeks of the session.
Those interested in tracking what is going on with regards to these decisions, I encourage you to view Legislative Commission on Planning and Fiscal Policy (LCPFP) spreadsheets of the budget proposals posted on the House web site: www.house.leg.state.mn.us/fiscal/tracking.htm.
We need to keep working on bipartisan approaches to meet Minnesota's revenue needs to address our current budget shortfall and fit our future budgets. As always, I welcome your continued input as I endeavor to do my best to represent you.
Bunn (DFL-Lake Elmo) represents District 56A in the Minnesota House of Representatives. She can be reached at (651) 296-4244, by mail at 521 State Office Building, 100 Martin Luther King Blvd., St. Paul, MN 55155 or via e-mail at rep.Julie.email@example.com.