The first bill passed by the House this year would take a $1 billion slice out of the state’s projected $6.2 billion budget shortfall.
Sponsored by Rep. Mary Liz Holberg (R-Lakeville), HF130 would cut $181 million in spending in the current biennium and reduce the state’s next two-year budget by $822 million. Holberg said the bill would give lawmakers a head start on addressing the deficit.
“We’ve got a big problem in front of us. To start working on this now makes sense,” she said.
The House passed the bill 68-63. It now goes to the Senate, where Sen. Claire Robling (R-Jordan) is the sponsor.
The bill would extend temporary budget cuts that were passed during last year’s May special session. These include: $594.5 million in reductions to property tax aids and credits; $185 million to higher education; and $46.5 million to health and human services programs.
Supporters said the reductions are merely a continuation of current funding levels into the next biennium, and said they should not come as a surprise to anyone. They argued this package of cuts would be the easiest that lawmakers will vote on this session.
“If anyone thinks we can balance this budget without making some reductions, you’re not living in reality,” said Rep. Jenifer Loon (R-Eden Prairie).
Among the largest reductions, city and county aid would be reduced $487.5 million. The property tax refund credit for renters would shrink from 19 percent to 15 percent of rent paid, reducing that program by $105.9 million. The Minnesota State Colleges and Universities system would be reduced by $95.8 million, while the University of Minnesota would take an $89.2 million reduction.
DFL members argued the reductions would lead to higher property taxes and college tuition, and would further burden already strained human services programs that protect children and vulnerable adults. Many called the bill “reckless,” and said it had been rushed through the committee process without input from the public.
“I think that these cuts are reckless, I think that they are misguided, and I think we need to go through a deliberative process to figure out how we can make this work,” said Rep. Jeff Hayden (DFL-Mpls).
Members also expressed concern about a part of the bill that would require state agencies to hold back $199 million in unspent funds in the current fiscal biennium. Gov. Mark Dayton’s administration would be given discretion over which areas of the budget would be cut, but some members said there’s not enough money left on the bottom line.
Rep. Lyle Koenen (DFL-Clara City) said the bill could impact funding for tuition reimbursement and reintegration programs for veterans and their families. Rep. Kory Kath (DFL-Owatonna) expressed concern it could impact funding for flood relief.
Other provisions in the bill include a salary freeze for state workers and a package of federal tax conformity changes. The salary freeze would not technically save money in the next biennium, but would prevent pay increases that could grow the budget deficit.
Supporters stressed the urgency of the state’s looming budget problems.
“We have been making promises we cannot keep with money we do not have,” said Rep. Steve Gottwalt (R-St. Cloud). “It’s time to get started solving this budget deficit.