Viewpoint: Straight talk on current budget proposals

Talk about it

Minnesota is facing the largest budget deficit of the last 70 years. The governor, the Senate and the House have now all placed proposals on the table for discussion.

The similarities across the various proposals, while often overlooked by the media, can be the most instructive as to what the final solution might actually contain.

All three budgets propose deep cuts that will affect people throughout our communities and state, across every category.

All three budgets employ federal stimulus dollars to reduce or delay the pain of our state crisis.

All three proposals delay well over $1 billion in payments to school districts, thus forcing them to use reserves or borrow for short-term cash flow purposes.

And all three budgets rely on new revenues; they just take different approaches as to what type.

To keep this in perspective, if no shifts or new revenues were employed, and only one-time monies from the federal stimulus used, and if we cut all education categories four to five percent, all other sections of the budget — environmental and natural resources, health and human services, and aids to cities and counties — would all face cuts in the range of 20 percent or more. What would this mean?

Under these cuts, over 12,000 school employees across the state could lose their jobs, tuition at the UMN and MnSCU would rise significantly, 10 percent of all hospitals and 33 percent of nursing homes would close, three prisons would need to close, and property taxes would increase by as much as a billion dollars to offset part of the cuts to local governments.

The governor’s initial budget of late January, rounding to billions, balanced a $5 billion deficit with $2 billion in cuts, $1 billion in stimulus money, and $2 billion in borrowing.

His revised budget, to address what had grown by late February to a $6.4 billion deficit, includes roughly $2 billion in cuts, $2.5 billion in stimulus money, $ 1 billion in delayed education payments, and $1 billion in bonding to provide additional one-time revenues.

Both budgets leave a very large deficit to face again in 2012-13, over $2.5 billion dollars (without inflation).

Both the House and the Senate balance the budget with a 4-year plan but rely on different approaches while still sharing a commitment to make real changes to poise Minnesota for future economic prosperity.

Both legislative bodies prioritized their budgets with short-term and long-term initiatives that employ the concept of shared sacrifice to fix our structural budget deficit problem.

The Senate plan proposes making seven percent, across-the-board cuts to state spending and is balanced through 2013 by making a total of $5.1 billion in cuts over the next four years.

The Senate cuts $1 billion more from General Funds in 2010-11 than proposed by the governor. In addition to cuts, the Senate plan calls for $2 billion in new revenues in 2010-11.

Last week, State House leaders released their budget plan. After using federal stimulus money and a slightly larger delay (than the governor’s) in education payments, they fill the remaining $3 billion gap with $1.5 billion in cuts and $1.5 billion in new revenues.

The key distinction between the House and governor’s proposals is that the House chose to raise additional revenues rather than engage in the Governor’s additional $1 billion of borrowing and raiding of dedicated health care funds.

The House proposal differs most strikingly from the Senate proposal in that it set priorities rather than doing across the board cuts. The House proposal reflects a priority on education, public safety, and keeping a basic safety net intact.

The budgets developed by the House and the Senate share a commitment to pay as we go rather than pass our debt on to our children.

The governor’s budget proposal delays our budget problems by relying on significant borrowing that carries a big price tag into the future. The estimated cost for repaying the $1 billion in bonds he uses to fill a one-time revenue gap is $1.569 billion over 20 years.

I have problems with components of all three budget proposals.

The House proposal appears to most closely reflect the priorities I heard at the town hall meetings throughout our district.

Yet, while the House and Senate proposals rightly try to balance the budget out four rather than two years, the final solution needs to do even more to address long-term fiscal sustainability.

Cuts will most likely need to be even deeper, and reforms even more dramatic, than what has thus far been proposed.

Also, my House and Senate colleagues have not adequately addressed business climate or revenue volatility issues. I shall continue to be a strong voice for changes to address these concerns.

At recent statewide meetings, Minnesotans shared their concerns and questions about the state of our economy and budget solutions.

The overwhelming message was that Minnesotans are willing to work together to address this economic crisis, but they also want real changes that will make our state economy healthy into the future. I share these goals.

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.bunn@house.mn.

Tags: opinion, bunn, viewpoint, budget, proposals, deficit, governor