Cost of government soars due to inflation
Just about everything costs more these days with the rate of inflation running at close to nine percent. Unfortunately for state taxpayers, that includes the price of government at all…
The Legislature concluded the special session early Friday morning, sending a flurry of budget bills to Governor Dayton.
This is a budget year when the general fund spending is set for the next two years but there was unfinished business on bonding from past years, so there is a bonding bill on the Governor’s desk, too.
Governor Dayton now has to decide whether to sign or veto a budget deal of just under $46 billion dollars for the 2018-2019 biennium. To put that in context (so you can see what the Dayton administration has done to increase general fund spending, which in turn increase federal tax dollars we consume, over 6 years):
$45.7 billion 2018-2019
$41.8 billion 2016-2017
$39.6 billion 2014-2015
$35.3 billion 2012-2013
We note that the Governor has presided over a $10 billion increase in state general fund spending. You can view a pie chart of the current general fund budget of $41.8 billion here. And a pie chart of “All Funds” that Minnesota spends ($76.4 billion) here.
Transportation, Transit & Met Council
Roads and bridges will get $2 billion over 10 years in existing revenue from automotive-related taxes (so taxes are not raised) plus about a billion in new bonding. This was the big goal.
Transit and the Met Council were a roadblock for an agreement throughout the session: except for metro DFLers, most lawmakers wanted a roads & bridges bill that addresses congestion, repair and safety issues.
Transit: a deal was cut to let the Met Council work with Hennepin County to build the $2 billion SW Light Rail if they can get federal funding. The state has washed its hands of LRT expansion; the state will not pay any operating costs for LRT expansion, but Hennepin can now raise the county sales tax to generate $125 million a year in new revenue. The county has already held a hearing to raise the sales tax, and said it will issue bonds (which relieves the Met Council from issuing a dubious form of debt). Big problem: The Trump budget excludes all new transit projects in Minnesota from funding. Stay tuned.
The Met Council was given a $70 million bump to help with bus transit (it is running an operational deficit presumably because it favors LRT over buses). The Met Council’s transit spending will be audited next year.
Met Council governance reform was removed from legislation. It would have allowed cities and counties to appoint commissioners rather than the governor. The Center prefers a total reorganization of the Council that addresses its unprecedented scope of authority to the reform measures.
K-12 Education & Related Bills
The K-12 bill increases spending by $483 million in addition to $800 million in automatic increases, for a total budget of $18.75 billion (a 3.5% increase). The big policy fight was over Governor Dayton’s goal of getting all 4-year-olds into our K-12 schools before he leaves office, creating at least 3,000 new dues-paying teacher positions.
The bill has a compromise for all concerned: $50 million in one-time funds. These funds give schools a choice: they can spend it on Dayton’s pre-K or other school readiness programs. Because it is one-time money, the hope is that most schools will be less than enthusiastic about a new program and will work instead with existing enrichment programs for nursery-aged children. There is also $140 million for early learning scholarships for at-risk kids.
A tax credit to support Opportunity Scholarships for low-income at risk kids to go to private schools did not make it because Dayton views these scholarships as “vouchers.”
Some victories: when faced with layoffs, schools would be free to ignore union seniority clauses (last in, first out, or “LIFO”) and instead make decisions about staffing based on talent. And teacher licensing rules will be over-hauled to allow out-of-state and other teachers to get licensed to teach.