~ Changes to January budget recommendations balance budget for FY 2010-11 & FY 2012-13 ~

Saint Paul – Governor Pawlenty today sent a letter to the legislature, transmitting revisions to the budget proposal he outlined in January. The budget revisions take into account the February Budget Forecast, the availability of federal stimulus funding and other updates.

Under the Governor’s revised budget, the total amount of state general fund expenditures in FY 2010-11 would be $32.6 billion, a reduction of approximately 4 percent from the $33.9 billion in general fund expenditures in the current FY 2008-09 budget.

The most significant changes to the Governor’s budget plan would increase K-12 education funding beyond the level proposed by Governor Pawlenty in January, restore funding for the University of Minnesota and the Minnesota State Colleges and Universities system, increase funding for higher education state grants, delay eligibility changes for parents on Medical Assistance or MinnesotaCare, reform the state’s General Assistance Medical Care program, put short-term offenders in state prisons, exempt unemployment insurance benefits from state taxes up to $2,400 per individual, and provide an addition $10 million for operation of state courts.

“This budget is lean and focused,” Governor Pawlenty said. “In these tough economic times, we can’t do everything, but we will do what’s important to help get our state moving forward. For starters, government will live within its means and not pile a big tax increase on families and businesses who are already struggling.”

Governor Pawlenty’s budget plan details by category recommended spending levels for FY 2010-11 and for FY 2012-13. For the FY 2012-13 budget period, the Governor recommended freezing Health & Human Services and Property Tax Aids & Credits at FY 2010-11 levels and reducing State Government funding in order to balance the budget over that four-year timeframe.

Notable changes to the Governor’s January budget recommendations include:

K-12 Education

Governor Pawlenty’s January budget increased spending for K-12 education even during these challenging economic times. Federal stimulus funding makes it possible to achieve significant General Fund savings in K-12 education while providing an even larger K-12 funding increase than the Governor previously proposed. The revised recommendations include using $424 million in FY10-11 of federal stabilization funds for this purpose. This will increase Governor Pawlenty’s K-12 funding recommendation to $14.1 Billion.

Higher Education

Previously proposed reductions in funding for the University of Minnesota and the Minnesota State Colleges and University system would be restored. With higher education funding levels being restored, Governor Pawlenty renewed his recommendation that both systems freeze or cap tuition increases.

In addition, qualified students should receive increases in student grant funding due to an increase in the Pell grant program under the federal stimulus package. 

Human Services

Certain eligibility related funding reductions would be delayed until January 2011 in light of the requirements of the federal stimulus legislation. These delayed reductions will temporarily restore eligibility for Medical Assistance as well as MinnesotaCare eligibility for parents.  

The Governor is recommending that other health care reforms move forward. The Governor’s revisions propose saving $172 million from the state’s general fund by reconfiguring the General Assistance Medical Care (GAMC) program so care is provided in clinics, where appropriate, not in emergency rooms. Current inpatient coverage would also be replaced with a more straight-forward subsidy to hospitals through an uncompensated care pool. This pool would be augmented with a more limited set of outpatient benefits including physician, pharmacy, laboratory and mental health services. Care coordination will also be piloted. These services are intended to reduce emergency room visits and hospitalizations.

Funding for Federal Stimulus Match and Reporting Requirements

Governor Pawlenty’s budget revisions recommend $10.7 million to ensure Minnesota is able to compete for and manage federal stimulus funds. This appropriation will be used for matching requirements in areas such as health information technology, as well as yet to be identified state match requirements. A portion of these funds will be used to oversee and report the use of federal funds to ensure compliance with all applicable requirements.

Public Safety

The Governor recommends repealing the requirement that short-term offenders serve their sentence at the local level. Instead, such offenders will serve their time at Minnesota Department of Corrections facilities. This will relieve a significant financial burden on counties. It will cost the state $8.2 million in FY10-11.  

Exempting Unemployment Insurance Benefits from State Income Taxes

Governor Pawlenty recommends exempting up to the first $2,400 in unemployment insurance benefits to individuals from state income taxes in tax year 2009 in conformance with federal law. This is a one-time $28 million dollar expense.

Additional Assistance for the Courts

The Governor recommends an additional $10 million for the operation of the courts. This is one time funding for FY10-11.

Click here to view the Governor's Revised FY 09-10 Budget plan

Click here to view the Governor's Revised FY 11-12 Budget plan