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First Things First - Fulfilling Our Basic Responsibilities
Source: Executive Budget Summary

The governor set high expectations for this budget - limited growth coupled with unlimited expectations for government reform and accountability. yet the governor has always been clear that reform and tax cuts cannot come by neglecting the state's core responsibilities.

Meeting both those challenges has not been an easy task. Even small changes, providing the most basic of inflationary adjustments, do not come cheap. These changes do not sell themselves, either - they are never exciting nor attention grabbing.

Still, a primary responsibility of the budget is to make state government work for Minnesotans and this budget does that. But that doesn't mean government was protected from tough choices. At the first budget meeting, commissioners were put on notice that there would be limited funds for new activities. They would have to reallocate and reprioritize, review and reassess. any agency wanting new money would have to show results.

The budget instructions sent a clear message to state agencies - there are things that we won't get to do this session. If the Legislature also limits spending growth, it will face the same difficult choices.

Basic investments in the governor's budget include the following:
  • State agencies are provided with a 3 percent increase ($139 million from all funds) to cover salary and compensation costs. Expected increases in health insurance costs will consume at least one-half of that increase. In many instances, these are the only operational increases provided to state agencies. They are expected to manage within these limitations.
  • The Courts and Public Defenders are provided with an additional 4-5 percent increase ($27 million) to cover rapidly increasing caseload costs, most of which were created by recent changes in state law.
  • The State Patrol is provided an additional $4 million to ensure that annual training academies can continue and that ongoing trooper salary costs are budgeted for graduating recruits.
  • State prisons are given locks and security systems at a cost of $3 million because some of the buildings were never intended to hold criminals, and they must be retrofitted to make them safe for the prisoners and the staff. community Corrections funding is increased $14 million to maintain correctional services for offenders living in the community.
  • Contingent reserves are increased by $10 million to anticipate and prepare for emergencies and deficiencies.
  • Asset preservation is emphasized in the capital budget to reduce the backlog of repairs, and renovate or replace obsolete facilities. $365 million of the proposed $504 million capital budget is dedicated to asset preservation.
Partnering with Other Public Providers
After taking care of core duties, the state must then turn to partner with state universities, local government,health providers, local schools, and other public systems.

The governor's budget is clear that the state will be a responsible partner but is not going to be solely responsible for these organizations. Our partners have independent decision-making authority for setting costs and priorities. Our partners have more flexibility in funding because they can sometimes access other revenue sources. But they will face the same tough choices that all organizations face, as costs grow, demands rise and needs proliferate.

The governor recommends:
  • $99 million for higher education institutions including $30 million for student financial aid. This is two-thirds of a 3 percent increase for faculty and staff compensation. Traditionally, state appropriations cover two-thirds of instructional costs with the remainder coming from tuition.
  • The governor recommends significantly increasing the funds going to financial aid because he believes more resources should be put in the hands of the individuals, forcing institutions to adapt programs to meet current needs in order to stay competitive.
  • $30 million for Metropolitan Transit to maintain and expand levels of bus ridership. State funding would be supplemented with a potential fare increase.
  • $174 million to exempt local governments from state sales taxes. Current laws taxes cities and counties even though that money - and more - is sent back in aid payments. Ending the tax will simplify intergovernmental finance and provide local units of government with new resources to manage local costs, such as the Public Employee Retirement Association (PERA) deficiency.
  • $65 million for a 2 percent cost of living adjustment for K-12 instructional staff, effective in the second year of the biennium. this delayed increase recognizes the $107 million in ongoing funds added to the current budget last session - a "non-budget" year. The tax plans also proposed major changes to the way that schools are funded and clarifies local and state roles.
  • $23 million for a 2 percent cost of living adjustment for long term care providers, effective in the second year of the biennium. This delayed increase reflects the $26 million in ongoing funds added to the budget in the last legislative session.

System Reform
Some of the problems faced in these systems will not be fixed with more money. Labor shortages, scarce resources, and marketplace challenges will not disappear without fundamental reform. The governor's budget recognizes this concern and recommends new directions for the future.
  • Nursing homes have too many beds, too few workers, and too many new competitors. As a result of the work of his commissioners and key legislators, the governor recommends a reform package that reduces the number of nursing home beds. Savings are redirected to reward facilities that downsize and to fund more community-based supports.
  • K-12 schools have teacher contracts with "steps and lanes" - each year provides an automatic raise followed by contract negotiations for additional increases. This budget provides funds for a new Performance Incentive Pool that will encourage school boards to reward teachers for teaching, not tenure.
  • Child care is automatically available to anyone on welfare, but a family who isn't on welfare - with the same income - might have to go on a waiting list. The current system sets up the wrong incentives and doesn't target state dollars to the neediest families. This budget consolidates child care funding so that the poorest people get the most help, and so that you don't have to be on welfare to get child care.
  • The University of Minnesota provides cutting edge medical research and training even though the state's health system has shortages of general practitioners and nurses. The budget includes additional funding from the General Fund and tobacco endowments to help the Academic Health Center and the Minnesota Department of Health reform medical training while stabilizing funding.

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