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Budget Highlights
Source: Executive Budget Summary

What this Budget Offers Minnesotans
Last year Minnesotans paid a total of $23.9 billion in state taxes and fees, school property taxes and fees, county, city and township property tax and fees and other governmental charges. That was the amount raised to fund public services in Minnesota. It was equal to 16.3 cents of every dollar earned and represents the "price of government" in Minnesota.

Affordable Government

  • Reduces the "price of government" over the next four years - saving taxpayers over $1 billion annually by 2003.
  • Permits a responsible level of growth in state and local revenues.
  • Recommends reallocations and strategic investments that better position the state for the challenges of the 21st century.

Accountable Government
  • Proposes fundamental restructuring of our tax system to make it a fairer system and better prepare us for the "new economy."
  • Provides prudent financial management that recognizes risk in the economic outlook.
  • Recognizes state responsibilities, as well as providing local government revenue flexibility and accountability.
  • Focuses on the individual, not the institution, to increase choice and competition.

Responsible Government
  • Builds upon an 18-month dialogue with citizens, stakeholders, policymakers.
  • Funds core state responsibilities and priority areas.
  • Makes strategic investments that recognize changing demographics and a changing economy.
  • Maximizes value for the dollar, by focusing on outcomes, not new spending.

Taxes, Other Revenues
General fund revenues are forecast to grow $2.816 billion or an average of 5.4 percent per year in the 2002-03 biennium over the preceding biennium. The governor recommends tax cuts totalling $1.428 billion for FY 2001, FY 2002, and FY 2003. Nearly 47 percent of the forecast growth in revenues is used for tax reductions.
  • Provide a sales tax rebate of $925 million to "settle-up" with taxpayers for fiscal year 2001.
  • Cut income taxes by reducing all tax bracket rates by 0.4 percent for 2001, an additional 0.1 percent in 2003, and another 0.1 percent in 2004 if resources are available.
  • Increase the Working Family Credit for 2001, more than doubling it by tax year 2003.
  • Reduce states sales taxes to 6 percent from 6.5 percent. Broaden sales taxes to include services, but continue to exempt food, clothing and heating fuels.
  • Reduce the motor vehicle registration tax to a maximum of $189 in the first year and a maximum of $89 thereafter beginning in January, 2002. Further reduce to a maximum of $75 for all years beginning in 2004.
  • Reduce the corporate income tax rate to 9.4 percent while expanding sales tax exemptions for business material and equipment.
  • Eliminate wholesale prescription drug tax and HMO premium tax. Eliminates the scheduled 0.5 percent increase in the provider tax and permanently limits reliance on provider tax by capping it at the current rate.
  • Deposit remaining one-time tobacco settlement revenues into an endowment to improve the health of our children and to support Minnesota's health care infrastructure.
For the 2002-03 biennium, General Fund spending will total $27.324 billion. This is an increase of $2.717 billion over the current biennium. Excluding the increases associated with property tax restructuring, this is a 5.4 percent increase over FY 2000-01.
  • Core Services: recognize inflationary costs of existing responsibilities: compensation costs for state employees ($92 million), higher education employees ($80 million), teachers ($65 million), and health care providers ($23 million).
  • Prevention: increase spending to reduce health disparities for minority populations ($14 million), teen pregnancy prevention ($22 million), and expanded health care coverage for children ($14 million).
  • Workforce: increase training funds for the Job Skills Partnership ($5 million), increase and target financial aid ($30 million) create a performance incentive pool for teachers ($15 million), teacher recruitment strategies, including loan forgiveness ($10 million).
  • Technology: provide funding for integration and further development of criminal justice information systems ($27 million), fund infrastructure needs of state government, including electronic services ($76 million).
  • Reallocations: for more effective results, shift focus from long-term institutional care (nursing homes) to community care programs, reduce institutional costs for prisons and invest in community correctional programs.
Reserves, Financial Management
  • Dedicate interest earned to automatically increase the Budget Reserve from $622 to $700 million by FY 2003 - 4.8 percent of FY 2003 spending.
  • Pay back "loans" from businesses and local units of government enacted in the early 1980's by eliminate the June sales tax acceleration ($144 million) and moving local aid payments from July forward to May ($255 million)

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