The governor recently released his proposal to balance a $1.2 billion budget deficit for the current spending period, which ends on July 1 of next year.
The governor's proposed cuts break down like this:
- $250 million cut from the funds that come back to cities, towns, and counties to pay for police, fire, maintenance, and public safety.
- $347 million in cuts in payments to local nursing homes, hospitals, and clinics.
- $47 million in cuts to colleges, technical schools, and universities.
- $61 million in reductions at state agencies.
If it doesn't look to you like that adds up to $1.2 billion, you're right. The actual cuts suggested by the governor are only around three-fifths of what we need to balance the budget.
He calculates the rest of the amount needed through one-time shifts of about $120 million among state accounts, and by counting on Congress passing $387 million in enhanced Medicaid matching funds for Minnesota.
As this legislative session progresses, we will flesh out more details on this proposal and look for other additional ways to balance the budget. I'm keeping an open mind, and will work with the Pawlenty administration and legislators on both sides of the aisle before I vote. With that in mind, here's my first take on the governor's proposal:
- We'll probably need to cut more. In the absence of new revenue, anything that isn't an actual cut means that the rest will show up as an obligation in the next biennium. It would be better to take our medicine now.
- Spending cuts shouldn't put money in one pocket while pulling it out of another. Cuts by the state shouldn't end up as property tax increases on the local level or higher hospital or nursing home bills.
- Make better priorities for cuts. One of the proposed cuts would be to local nursing homes, which the governor hopes to balance off by allowing nursing homes to charge more for patients that pay out of their own pocket. I'm not sure how this saves money in the long-run, especially if you consider that higher nursing home bills would cause patients to burn through their savings faster -- forcing even more of them onto Medicaid. I'd rather see bigger cuts to the bureaucracies in St. Paul before resorting to this kind of scheme.
- Gov. Pawlenty is right to support more Medicaid funding from Washington, but I wouldn't have entered it in the ledger book just yet. According to the non-partisan Tax Foundation, for every dollar Minnesotans send to Washington in the form of federal taxes, we get back only 72 cents in federal services and funding. By comparison, North Dakotans get back $1.68. It's an unequal distribution of federal funds, and part of the reason Minnesota is a comparatively high tax state. We should get behind the bipartisan effort to improve our share of funds to pay for health care. But passage isn't a sure thing, and I think it would have been more prudent to suggest greater cuts rather than counting funds which haven't been authorized yet.
As I said, that's my first take on the budget, and I'll be working to protect your interests at the Capitol. One thing is certain; there will be substantial cuts to state spending, possibly more than has been suggested by the governor. As always, I look forward to hearing from you on this or any other issue before the Legislature.
