This is the week that Republican legislators are expected to match their deeds with their campaign rhetoric.
Both Senate and House leaders are expected to hand spending “targets” to the legislative committees. Add up those targets and you’ll get a pretty good picture of how the Republican-controlled Legislature plans to hold Minnesota spending to $33 billion in the 2012-13 biennium and put the state’s $5 billion deficit into balance without raising taxes.
That $33 billion is about $4 billion less than spending proposed by Gov. Mark Dayton, who would raise taxes on Minnesota’s top wage earners.
“It’s a monumental job, nothing fun about it,” said Republican Sen. Warren Limmer of the GOP vision. “I don’t think even the fiercest fiscal conservative would tell you that this is easy.”
Yet, throughout their campaigns, Republicans have insisted that it’s a job that must be done and that they will do it.
Conversations with numerous legislators and others involved in the budgeting process lead to some sweeping generalizations. They declined to be quoted but agreed to share their views of what’s ahead on a background basis only.
Can it be done?
DFLers simply don’t believe it can be done. They also believe that tensions are rising within the Republican caucus over how painstakingly hard the process will be.
Republicans, on the other hand, don’t deny their task is hard. But they seem to rally around the idea that state government is constitutionally required to cover three main areas: public safety (which includes the judiciary and prisons), K-12 education and transportation.
Everything else — much of what is done by Human Services and such things as Local Government Aid — is icing on the budget cake.
Limmer, who chairs the Judiciary & Public Safety Budget & Policy Committee, points out just how much our view of government has changed in the last few decades.
In 1974, he said, there were four volumes of Minnesota statutes that covered the first 120 years of statehood.
Since then, nine new volumes of statutes have been added ,and “the size of the type has become smaller!”
Most of those statutes include some sort of state spending.
“That was fine when times were good and the economy was roaring,” Limmer said. “But that’s not where we are now.”
So scaling back government is the guiding — and uniting — Republican principle. But again, that’s much easier said than done.
Here, according to insiders, is what’s likely to happen under the Republican budgeting process:
The budgeting process
Start with this: After consultation with caucus leaders and committee chairs, the targets have been established by Rep. Mary Liz Holberg, chair of the House Ways and Means Committee, and Sen. Claire Robling, chair of the Senate’s Finance Committee.
Once those targets have been announced, it is considered extremely bad form by other committee chairs to whine about their targets.
The respective committees will hold hearings on those targets, hearings that will be filled with angst over proposed cuts. Adjustments in where money is spent will be made by the various committees, but always within the targeted goal.
Although the Republicans have vowed they want to create stability in future budgets by doing away with “gimmicks” that have led to budget-balancing in the past, the first big step Republicans will make toward balance is a traditional gimmick.
Like the governor, they will continue the “shift” of $1.4 billion owed to K-12 education. That money was shifted into the future last year, sort of a giant IOU from the state to school districts. By continuing the shift, the deficit falls to $3.6 billion. (It’s possible that even more money could be added to the shift, though it would be hard to sell that as anything but a gimmick.)
K-12 education accounts for 38 percent of the budget, meaning more will have to come from that pot, even though many Republicans have promised to hold education “harmless” in the budgeting process.
Holding education ‘harmless’
But “harmless” is one of those terms that means very different things to different people, and given the complexity of the K-12 budget of about $14 billion, it’s not difficult to use some smoke and mirrors and still claim that funding for kids has been “held harmless.”
The big puff of smoke Republicans will use to make cuts in the education budget will center on the last budget, which included $500 million in federal stimulus money. That money is gone, but Republicans almost certainly will say that the state, in these hard times, can’t be expected to replace it.
So likely, that will end up as the baseline targeted cut, bringing the overall deficit to around $3.1 billion.
Republicans almost certainly will use the word “equity” and the mantra that “a kid is a kid is a kid” to explain how lopping $500 million from education isn’t really a cut to classroom activities.
Under the current budget, the state pays a base level of $5,124 per student in K-12. But the per-pupil funding formula is complex: If your child is in a remote school district where transportation costs are high, per-student funding is added to the base level. In the urban districts of Minneapolis and St. Paul, there are substantial increases in per student funding because the formula gives credits based on poverty and special-language needs.
Republicans likely will insist that “equity” means that the disparity in per-pupil funding should be dramatically reduced, meaning they will attempt to move some money from urban areas and pass it down the road to a suburban or rural district.
With line-item power on the massive education budget, they also will go after such things as after-school and adult-ed programs.
“There’s a difference between necessities and niceties,” Republicans have been fond of saying.
The Republicans will say their cuts “shouldn’t hit the classroom,” which is their way of saying K-12 has been held harmless.
They also will offer up such legislation as the proposal to “freeze” all teacher wages in the next two years as proof that they’re helping local school districts. It should be noted that, according to the Department of Education, 50 percent of the state’s districts already have reached freeze agreements with their teachers in negotiated settlements.
(The Dayton budget proposal called for a minuscule increase in K-12 spending, including $28 million for funding all-day kindergarten programs in districts where poverty is greatest. That won’t be part of the Republican approach.)
Reviving vetoed cuts
OK, so the deficit is down to $3.1 billion. What next?
In its first $1 billion cut proposal offered up by Republicans earlier in this session (legislation that was vetoed by the governor), there were $100 million in cuts to the University of Minnesota and MNSCU. Surely, that will come back in a final proposal, meaning the deficit has been cut to $3 billion.
Additionally, Local Government Aid is certain to be a Republican target. In that first piecemeal budget proposal, they proposed cutting LGA by $487 million, roughly half of what remains of a program that has taken hits for years. Re-passing that cut brings the deficit down to $2.5 billion.
There will be legislation pushing for reductions in the state workforce. There will be proposals to cut supervisory and management positions. There will be hiring freezes, cutting of travel budgets and restrictions on purchases of everything from new computers to new vehicles.
All of these things will amount to chump change that will do little to fill that $2.5 billion hole. There will be vague promises of “reforms” that the majority will claim will save $200 million.
And watch for some sleight-of-hand shifting of money from one pot to another. For example, last session some Republican legislators said that some Legacy Amendment funds were duplicating some DNR projects, so if agency’s funds are cut the projects still would be carried out. Never mind that legacy money is supposed to be “in addition to” funds currently being spent.
That effort to use Legacy money in the general fund is showing up in all sorts of ways. For example, the governor’s budget called for a $1.5 million water study, pertaining to mining and wild rice.
Grabbing Legacy funding?
The Republicans seem to agree the study needs to be done, but they’re pushing for a bill in which that study would be paid for out of Legacy funding.
There are other ways the majority surely will use to try to cover some of their cuts. Despite the fact that Republican Party Chairman Tony Sutton has reminded legislators that no increases in revenue means more than just no new taxes but also includes no fee increases, watch for fees across all levels of government to be increased.
But with all of this, there’s still at least a $2 billion problem and only one place to turn: Human Services. At $12.2 billion in the current budget, it is the second largest portion of state spending (behind K-12) and by far the fastest growing.
On the surface, it also seems politically the easiest to cut because, in the words of one DFL legislator, “there may be a perception that its money going to the least deserving.”
The big target: Human Services
To balance the budget without increasing revenues, the “target” will have to be at least $2 billion in cuts — and that depth of cutting, DFLers believe, will create outrage across the state.
Only a small portion of the Human Services budget goes to the classic welfare family. The aging population across the state is responsible for much of the rapid rise. Payments to nursing homes, caregivers for those with disabilities, medical assistance to the working poor, and payments to clinics and hospitals account for most of the department’s spending.
Even some Republican legislators expressed angst over some of the cuts Dayton made in his initial budget to some of the programs. (He restored some of those cuts, when the new budget forecast showed that the deficit was $5 billion, instead of $6.2 billion.)
Still, Human Services is the only place the legislative majority can turn to balance the budget without increasing taxes.
The targets, which are expected this week, will only be a big-picture view of the Republican plan. It’s not until a final budget bill is presented at the end of the month that the specifics of an all-cut budget become clear.
“We truly are scratching our heads over how they plan to do it,” said Sen. Scott Dibble, a DFLer from Minneapolis.
Finally, when all of this work is done, it’s almost certainly headed for a veto.
And then it starts all over again.
Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.
James Nord, a University of Minnesota student, is a MinnPost intern.