On Monday morning, Governor Dayton released a supplemental budget proposal that focuses mostly on addressing concerns from last year’s budget. The recent February Forecast projected a small surplus for the current budget cycle, so no major budget changes are required.
Recognizing the state’s delicate financial situation, the Governor offers a budget-neutral proposal that includes $44 million in additional general fund spending for the FY 2012-13 biennium, but offsets that with $44 million in revenue increases. The Governor’s proposal leaves all $657 million in the state’s budget reserve.
The Governor’s supplemental budget responds to several concerns that have been raised since policymakers agreed to a budget for the FY 2012-13 biennium last July. These primarily are in the Health and Human Services area. For example, two significant changes include:
- Repealing a 20 percent cut in payments to people who work as personal care attendants (PCA) for family members with a disability. PCAs enable individuals who need assistance with the activities of daily life to remain in their community and avoid institutional care. This cut raised the concern that relative caregivers, especially those in rural areas, would have to find a different job to support themselves financially, leaving their relatives with no options for at-home care. A temporary restraining issued by a Ramsey County judge prevented this cut from being implemented last October.
- Restoring coverage for dialysis and cancer treatment under Emergency Medical Assistance (EMA). EMA provides health care coverage for qualifying non-citizens who face a medical emergency or suffer from a serious chronic health condition. In the 2011 budget agreement, coverage was reduced to medical emergencies treated in an emergency room or hospital. The Governor’s proposal partially restores coverage for treating some non-emergency, but critical, health concerns.
The Governor also moves forward with funding his “Jobs Bill,” which includes creating the Jobs Now Tax Credit for businesses that hire unemployed Minnesotans, veterans or recent graduates in 2012 or early 2013. New hires must remain employed for one year in order for the business to qualify. The Governor also expands the FastTRAC training program for underprepared adults and adds $10 million to the Minnesota Investment Fund to provide loans to expanding businesses.
There are also a small number of proposed changes in K-12 education, public safety, transportation, agriculture, economic development, state government, and environment, energy and natural resources.
The Governor proposes to pay for the spending increases in his supplemental budget by scaling back corporate tax reductions for corporations with overseas activities and by requiring certain online retailers to collect sales taxes. These provisions, similar to ones proposed by Governor Dayton last year, result in $44 million in additional revenue in the FY 2012-13 biennium and $120 million in FY 2014-15.
Whatever agreement Governor Dayton and the Legislature ultimately reach this session, they would be wise to follow Dayton’s approach of moderation in a time of great financial uncertainty. Policymakers should recognize the importance of having adequate reserves to address cash flow concerns and respond to economic changes, address some of the most harmful outcomes that have risen from last year’s actions, and ensure that they do not increase the size of the $1.1 billion shortfall that awaits us in the FY 2014-15 biennium.