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With an insider’s eye, Hot Dish tracks the tastiest bits of Minnesota’s political scene and keep you up-to-date on those elected to serve you.

Contributors in Minnesota: Jennifer Brooks, Baird Helgeson, Mike Kaszuba, Patricia Lopez, Jim Ragsdale, Brad Schrade and Rachel E. Stassen-Berger. Contributors in D.C.: Kevin Diaz and Corey Mitchell.

Posts about State budgets

Dayton, lawmakers lay out agendas for upcoming session

Posted by: Jennifer Brooks Updated: December 10, 2012 - 1:09 PM

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Gov. Mark Dayton and legislative leaders found a bit of common ground and plenty room for disagreement as they looked ahead to the upcoming legislative session.

Democrats will have complete control of state government for the first time in more than two decades, but the governor and the DFL leadership tried to tamp down expectations in the shadow of the fiscal cliff and a still-shaky economy.

"Any tip-toe we take, we'll be accused of overreaching," Dayton told reporters during a Monday morning roundtable with incoming House Speaker Paul Thissen, Senate Majority Leader Tom Bakk, House Minority Leader Kurt Daudt and Senate Minority Leader David Hann.

"This is not going to be, as some fear and some hope, a sky's-the-limit sort of approach. We have a $1.1 billion deficit we have to offset...We still owe the schools," Dayton continued. "We're not out of the fiscal hole that we dug for ourselves over the previous couple of bienniums. That's going to be the first reality."

For their part, GOP leaders balked at Democratic talk of tax increases -- a move Hann warned could cost jobs, sparking an argument with Dayton over the data Hann was using to back up his claim. Daudt signaled that there could be Republican support for another bonding bill, as long as it benefits rural areas as well as the big cities.

On social issues like gay marriage, Democrats were cautious, calling for more statewide debate on the issue. Bakk noted that he wouldn't be opposed to a bill legalizing medical marijuana, if it could address law enforcement concerns.

 

 

 

Property taxes slated to go up 2.3 percent statewide, revenue officials say

Posted by: Baird Helgeson Updated: December 7, 2012 - 12:18 PM

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Minnesotans can expect their property taxes to go up an average of 2.3 percent next year if proposed levy increases are approved, according to the Minnesota Department of Revenue.

Revenue officials arrived at the estimate by researching maximum levy amounts proposed across the state, which local governments are wrestling with now. The hikes could bring in an additional $187 million next year for schools, cities and counties.

On the whole, cities are asking for the largest average increase, about 3.1 percent. Counties want a 1.7 percent bump and schools are seeking a 2.1 percent hike.

Voters in 60 Minnesota school districts were asked for more education funding or to renew existing levies set to expire. Of the 60, voters in 43 approved at least part of the proposed levy increases.

The uptick in property taxes is likely to be a central issue at the Capitol during the upcoming legislative session. Revenue and budget officials are concerned the state has too much reliance on property taxes and not enough on sales and income taxes.

Revenue Commissioner Myron Frans has met with thousands of Minnesotans over the last year to discuss the tax system. He said soaring property taxes are an overwhelming concern he heard in every corner of the state.

Democrats contend that years of GOP budget reductions to cash-strapped local governments have forced officials to ratchet up property taxes to make up for lost state aid. Republicans say that local governments should be looking at efficiencies rather than immediately turning to local taxpayers.

DFL Gov. Mark Dayton’s staff is preparing a new budget and tax proposal and they are discussing measures aimed at driving down property taxes.
 

Gov. Dayton not worried about Vikings stadium revenue shortfall

Posted by: Baird Helgeson Updated: December 6, 2012 - 1:42 PM

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Gov. Mark Dayton said he is not worried that electronic pull-tab revenue slated to pay the state’s share of the new Minnesota Vikings stadium is predicted to come in lower than expected.

“I don’t think there’s any reason for concern right now,” Dayton said Thursday.

State budget officials on Wednesday reduced anticipated stadium revenue to $16 million for the next fiscal year, down from $34 million. Over the next several years, budget officials expect pull-tab revenue to continue lagging. The stadium reserve balance is now expected to be $47 million by the end of 2017; about $36 million lower than previous estimates.

The gambling revenue is slated to pay the state’s share of the new, nearly $1 billion stadium on the site of the Metrodome.

Dayton said it’s taking longer than expected for businesses to switch over to the new electronic pull-tabs and some are waiting to see what their competitors do. Businesses that switched over to the new iPad-like gambling devices have been very successful, Dayton said.

The governor said he does not anticipate that legislators will need to retool the stadium bill approved earlier this year, which could reignite another divisive, complex fight over the issue at the Capitol.

“I wouldn’t favor it unless it becomes absolutely necessary, and I don’t think it is at this point,” Dayton said.

Dayton plans to meet next week with Minnesota Revenue Commissioner Myron Frans and Gambling Control Board executive director Tom Barrett to discuss the projected revenue shortfall.

“I think it will resolve itself,” Dayton said.
 

Dec. 5: Stadium cash not coming in as quickly as expected, forecast says

Posted by: Rachel E. Stassen-Berger Updated: December 5, 2012 - 12:21 PM

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Tucked into Minnesota's economic forecast, along with the big picture look at state's spending and revenue projections, were passages that said that stadium cash is not flowing in as quickly as expected.

When lawmakers and the governor approved the Minnesota Vikings stadium, they assumed much of the state's share would come from gambling revenues from new electronic pulltabs.

Here's what the forecast said:

"As part of the Vikings stadium financing enacted in 2012, a small reserve was created within the state general fund. Unlike the cash flow and budget reserves, the stadium reserve is a bookkeeping account that simply reflects the balance of forecast revenue from the expanded gambling matched against forecast expenditures for stadium related costs.

For FY 2013, the projected reserve balance has been reduced from $34 to $16 million. Projected new gambling revenues from stadium legislation are expected to be $18 million (51 percent) below end-of-session estimates. For both the FY 2014-15 and FY 2016-17 biennia, estimates have been reduced $9 million (7.7 percent). The forecast reduction reflects a slower than expected implementation of electronic gaming options and reduced estimates for daily revenue per gaming device. As a result, the stadium reserve balance is now expected to be $47 million by the end of 2017, $36 million lower than end-of-session estimates."

Read the entire 102-page forecast here.

What the state forecasts say

Posted by: Jennifer Brooks Updated: December 5, 2012 - 11:57 AM

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By Baird Helgeson and Jennifer Brooks

Despite an improving economy, Minnesota state leaders face a new, $1.1 billion budget deficit, according a new economic update released Wednesday.

Minnesota has been pulling itself up during a fragile economic recovery, but the sliver of additional tax revenue is not enough to keep up with rising costs, the numbers show.

The budget numbers, which are always a moving target, are more uncertain than usual as Washington leaders debate the so-called fiscal cliff, which could plunge Minnesota and the nation into another recession.

Minnesota Management and Budget has released the complete economic and budget details. The new budget number will become the foundation of DFL Gov. Mark Dayton’s budget proposal, expected to be released next month.

The improving economy in the current budget cycle will allow the state to repay $1.3 billion borrowed from public schools to balance the state budget. However, the state still owes the schools more than $1 billion and the new deficit means there is no immediate plan to pay back the balance.

“The economy is a little weaker than we thought it would be last February. Not a lot weaker, but a little weaker,” State Economist Tom Stinson said.

The uncertainly around the fiscal cliff is a bigger drag on the economy, Stinson said. If President Barack Obama and Congressional leaders fail to strike a different budget deal, a menu of tax hikes and deep spending reductions will kick in and begin tugging at an already anemic economic recovery.

“There’s no reason for us to have a recession in 2013 or 2014,” Stinson said. “And if we do, it will be self-inflicted. But that doesn’t mean we won’t have one.”

If the two sides reach a deal and bring new predictability to taxes and spending, it could unleash a torrent of pent up spending and give a notable boost to the economy in Minnesota and the nation.

“One can imagine increased business spending and increased business hiring once they knew what the rules could be,” Stinson said.

The twice-annual economic forecast takes into account an array of indicators, including local economy, the national economy, even the financial instability spiraling throughout Europe.

Minnesota's economy is already doing better than many parts of the nation. Minnesota’s unemployment rate is hovering around 5.8 percent, about two full percentage points better than the national average.

Minnesota’s construction sector endured the worst of the last recession, and has suffered the most stubbornly high unemployment rates. Stinson said he finally sees that sector improving in a significant way.

“We are expecting the housing sector to begin to turn around and begin to grow over the next couple years,” he said.

The healthcare industry continues to outperform many other sectors, particularly as Minnesota baby boomers edge toward retirement.

Dayton is going to use the budget forecast data to form his budget proposal, which is likely to include a plan for a massive retooling of the state tax system.

The changing economy has left the state relying too little on income and sales taxes and placing too much reliance on property taxes, Dayton has said.

Dayton’s revenue and budget officials want to distribute the tax burden more evenly, potentially lowering some taxes and increasing others.

Stinson said a reshuffling of the tax laws could finally break Minnesota out of the cycle of annual budget deficits that caused years of statewide reductions and borrowing. State leaders haven’t made a comprehensive reform effort since the 1980s.

“We certainly need to make sure that Minnesota’s tax system is appropriate for dealing with the economy that we have in 2012 rather than the economy that existed in 1984,” Stinson said.

Read the full budget forecast documents here.
 

Full Budget Forecast

inside the StarTribune