State’s interest groups hanging in suspense over budget forecast secret

It’s the sexiest state secret state government ever has.

It’s the number that affects the lives of almost every Minnesotan, in some form or fashion. It’s the number every interest group that depends on state funding anticipates with glee or fear and dread.

It’s the state government budget forecast, and it will be announced to the public at precisely 11:15 a.m. Friday.

Here’s a refresher on State Budgeting 101: Minnesota has a biannual budget, with major budget decisions made in the even years. In the odd years, like this one, government has to adjust the state budget to reflect the forecast. The 2007-2008 budget, passed by the Legislature and signed by Gov. Tim Pawlenty, totals $34.6 billion.

Overseeing the state forecasting process is state economist Tom Stinson, who has held the job for 20 years through DFL, GOP and Independent administrations. Stinson and other Finance Department staffers who work on budget forecasts have earned — and continue to enjoy — stellar reputations for crunching thousands of numbers to try to determine Minnesota’s true financial picture.

The super-secret secret
How secret is the secret?

Stinson and his staff have known the crucial budget forecast numbers for a week. But Tom Hanson, the state’s commissioner of Finance, didn’t learn the number until Wednesday night, when he was presented with a draft of the budget book for his approval and release on Friday.

How super-secret is the secret? The governor will first learn the number and be briefed on it by Hanson and Stinson first thing Friday morning, probably about 7:30 a.m. Then Hanson and Stinson will brief key DFL and GOP legislators — at separate briefings — before the public announcement.

Asked whether anyone, particularly those pesky media types, pesters him to hint at the number, Hanson says, “Our process is professionally driven. Everybody knows the rules, and everybody respects them.”

While that’s true, observing the local and national economies is something we all do. Expert Stinson reiterated what he he’s been saying for weeks: “The U.S. economy and the Minnesota economy are going to struggle during 2008, and the struggles may be more significant than anybody thinks right now.”

Among the interest groups, then, there’s likely to be more fear and dread than anticipation and glee. Whether the numbers show a deficit or not, there are still key constituencies who plan to lobby the Legislature and the governor for more funding.

The state faces several constraints on state spending this year. For starters, the state has a $686 million budget reserve and about $350 million in a cash flow account. But the state is unlikely to raid that account, which functions a lot like the family checkbook, where some money is needed to cover bills that come due before new income arrives.

Regardless of forecast, groups will seek more money
Whatever the actual forecast number, several groups already are working Capitol halls looking for more money, and many legislators are promising them some.

At the top of the list, and most certainly matched by public sentiment, are education groups. Fresh off an election where about one-third of local school levy questions failed, the state’s school districts will be asking for a 2 percent increase in the current funding formula (about $90 million). Another priority is “finishing funding of state-promised money for special education [about another $90 million],” according to Scott Croonquist, the executive director of the Association of Metropolitan School Districts. The state money would compensate districts for promised federal funding that has never materialized. Croonquist’s group represents Minneapolis, St. Paul and first-tier suburban school districts.

The Minnesota School Boards Association represents all 343 Minnesota school districts. When asked if school districts will seek more funding even if the budget forecast predicts disaster, the association’s longtime executive director Bob Meeks says, “We have to try to find additional funding because we need it. To not do so would be an injustice to our students.”

Other school district associations, organized generally by geography, also will be asking for the same thing, in addition to the ongoing battle between the groups to adjust the formula to benefit their group’s members. These include Schools for Equity in Education, which represents 61 districts mostly in suburban/exurban areas; the Range Association of Municipalities and Schools; and the Minnesota Rural Education Association, which represents 151 outstate school districts.

Minnesota’s cities already have asked Pawlenty to call a special session to make up for Local Government Aid cuts first made in 2003, when the state faced a $4.5 billion shortfall. In particular, the cities want the $70 million in restored cuts contained in the tax bill Pawlenty vetoed last spring. If the budget outlook is dismal, “We’re going to have to re-evaluate what our position should be,” says Gary Carlson, the League of Minnesota Cities’ director of intergovernmental relations. “Education is going to be the 800-pound gorilla.”

The state’s 87 counties aren’t seeking new money, although they still are short about $40 million in federal funding for welfare benefits administration, so-called “targeted case management,” that the state has indicated it would float to counties. Minnesota is one of only 11 states where counties administer federal welfare benefits.

If there’s a disastrous budget shortfall? “We would only ask that the state do what the counties are doing to manage our budgets,” says Scott Simmons, the Association of Minnesota Counties’ intergovernmental services manager. That’s a polite way of saying, “Don’t look for the counties to bail out the state.”

Finally, the last of the groups already seeking funds are private nursing homes. Or rather, nursing homes “prefer to refer to it [about $25 million] as unfinished business from last session,” says Patti Cullen, the CEO and president of Care Providers of Minnesota, one of the state’s largest nursing home associations.

The nursing homes want the money to give their employees the same 3.25 percent wage increase that the state gave to employees working in publicly run nursing homes. The vast majority of patients in the private homes are paid for by government, so the private nursing homes call the funding issue one of “comparability.”

If there’s a bad budget shortfall? “That doesn’t change anything for us. It’s a matter of state prioritization,” says Cullen.

Still to be heard from is the other 800-pound gorilla, transportation interests. Many of those groups are still assembling their plans and may rely partially on the state’s likely $1 billion bonding bill package for much of this year’s requested funding increases.

At 11:16 a.m. Friday, we’ll know the secret number, and then the real jockeying will begin.

Sarah Janecek, publisher of Politics in Minnesota, writes about public affairs and politics. She can be reached at sjanacek [at] minnpost [dot] com.

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Comments (4)

  1. Submitted by Gary Peterson on 11/29/2007 - 12:15 pm.

    Sarah Janecek,
    Double-check the paragraph about State Budgeting 101. I believe the state has a “biennial” budget rather than “biannual.” Also, aren’t major budget decisions made in odd years, rather than even? And adjustments get made in even years, rather than odd. Otherwise, thanks for setting out the rest of the issues in the article so clearly!

  2. Anonymous Submitted by Anonymous on 11/29/2007 - 05:08 pm.

    Gary. Right on both counts. Should be biennial not biannual. Change out the “odds” with the “evens.”
    Remind Sarah to have another cup of coffee before her final edit. Thanks! And keep reading MinnPost.com.

  3. Submitted by Bernice Vetsch on 11/29/2007 - 06:55 pm.

    I would say that education and transportation are more than just “interest groups.”

    Both these essential components of government have been shortchanged by Governor Pawlenty and they show it. Our lack of investment cannot be covered up by borrowing/bonding forever. Progressive taxation helped make Minnesota a great state and it can again when we get over this very strange ideology and return to common-sense money management.

  4. Submitted by Justin Bartz on 11/30/2007 - 10:01 am.

    The intro caught my interest –

    “It’s the sexiest state secret state government ever has.”

    and rest did not disappoint. Great summary and excellent sources.

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