Minnesota budget primer: Trying to make sense of all those billion-dollar numbers

Minnesota budget primer: Trying to make sense of all those billion-dollar numbers
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$39 billion. $32 billion. $37 billion. $34 billion. The budget numbers are tossed around at the Capitol with remarkable ease these days.

What do they all mean?

Is it true that such conservative stalwarts as Gov. Tim Pawlenty, House Speaker Kurt Zellers and others once signed off on a $39 billion budget for the 2012-13 biennium that is to begin July 1?

Yes, but with caveats.

Is it possible that even if Gov. Mark Dayton would end up at the Republicans’ “all-cuts” budget figure of $34 billion that it likely would be the biggest budget in state history?

Probably, but it would be very close to the amount the state used in limping through the 2010-2011 budget period.

We’re on the verge of finishing up a biennium on a $34.5 billion budget, which was padded by $2.3 billion in federal stimulus money and reduced by $1.89 billion in a nifty little “shift” of money the state owes to K-12 education.

The big number
So again, start with that big number, $39 billion.

At Thursday’s mercifully brief meeting of the Legislative Commission on Planning and Fiscal Policy, Rep. Paul Thissen, the House minority leader, noted that Republicans, including Zellers and Pawlenty, once signed off on an anticipated $39 billion budget for 2012-13.

Zellers, who was not available for comment for this article, merely looked across the room when Thissen made the comment. The look on his face said: Why bother even trying to explain all of that?

But yes, there once was a $39 billion budget.

Understand, the Legislature is required by law to not only balance the budget for the “next” biennium (in this case, 2012-13), but they’re also supposed to balance the “out” biennium or the “tails” (2014-15) as well.

That’s written into law so that state financing would be predictable, stable, smooth. Working pretty well, isn’t it?

Obviously, lawmakers don’t take the “out” budget very seriously, since they get all bloody just trying to deal with the immediate financing needs.

Kicking the can
The term both Republicans and DFLers use to describe the state’s long-range budget process is “kicking the can down the road.”

DFLers say Republicans have “kicked the can down the road” by relying on shifts and accounting gimmicks, anything but state tax increases, to balance the short-term budget.

Republicans say DFLers have “kicked the can down the road” by constantly growing government.

Take your pick.

But in 2009, the Legislature and the governor “balanced” the “out” budget — the “tails,” the budget that was way, way off in 2012-13 — at $39 billion. There wasn’t a straight face in the House, Senate or governor’s office when they came up with that number.

It gets a little complicated why it stuck around.

Remember, in the 2010 session, there was an immediate, big shortfall to deal with in balancing the current budget. Pawlenty did that mostly through controversial “unallotments.” The state Supreme Court ruled that he’d been a little too enthusiastic with the use of his unallotment power.

However, DFLers, who controlled the Legislature, ultimately accepted Pawlenty’s cuts, but they refused to allow those cuts to be permanent. Instead they were to be temporary, ending with this budget period.

Pawlenty and most Republican legislators yielded and that’s how the $39 billion number was preserved when Dayton became governor in January.

One problem with a $39 billion budget: It was $6.188 billion short of reality, and everybody knew it.

So now, let’s go to this number: $32 billion.

The campaign budget number
Throughout the 2010 campaign, which gave them control of both the House and Senate, Republicans argued that they would force the state to live within in its means. The expectation was there would be about $32 billion in revenue for the upcoming biennium and that, by golly, was enough to run government, Republicans argued.

Many in the most conservative portion of the Republican caucuses still argue that $32 billion is enough.

But the Republicans NEVER presented a budget based on $32 billion being in the state checkbook.

The committee chairs were said to be extremely relieved when the February economic forecast showed improving times in Minnesota and that the state could expect to collect $34 billion in revenues in 2012-13.

That became the “checkbook” number Republicans have used to create their “cuts-only” budget, although some caucus revisionists claim that the $34 billion figure represents a compromise on their part.

The other numbers being tossed around have come mostly from the governor’s office.

For all his liberalism, Dayton never took the $39 billion seriously.

His first budget proposal, calling for tax increases and surtax that would have affected the top 5 percent of income earners in the state, would have created a $37.1 billion budget starting July 1. That budget, by law, had to be presented prior to the late February economic forecast. That forecast lowered the deficit from a projected $6.2 billion to $5 billion and the governor immediate dropped his call for the 3 percent surtax on the state’s wealthiest people.

Dayton has moved down from that $37.1 billion number, pointing out continually that he’s been willing to compromise and that it’s the Republicans who have refused to budge.

In his most recent proposal, made last month, Dayton came forward with a budget plan calling for total expenditures of $35.8 billion. He’s come halfway to meeting the Republicans, he says. That’s compromise in his book.

But all the Republicans see are the $1.8 billion in tax increases on the highest 2 percent of the wage earners.

And nobody seems to be talking about the “out” budget for 2014-15.

Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.

Comments (17)

  1. Submitted by Hiram Foster on 06/06/2011 - 10:40 am.

    “For all his liberalism, Dayton never took the $39 billion seriously.”

    I thought I might add that neither the governor nor anyone else took the 39 billion number seriously because that number included an immediate payback of the education shift, about 1.8 billion dollars. That just wasn’t in the cards, so the number dropped from 39 to 37 where Dayton was at for most of the session.

    Curiously, the Republicans often include the 1.8 billion education shift in their revenue estimates. They say we have spent 32 billion in the current biennium. That’s the figure you get if you include the shift, and don’t include the stimulus number. When Republicans are telling you they have increased state spending by 6%, the comparison 34 (the number the state actually spent including stimulus and shift monies) with 32 seems to be the number they are talking about. But the actual number the state spent from it’s revenues was about 30.2, so what’s being proposed is an increase of 12%. It’s interesting to me why they don’t use the higher number. I have wondered if it’s because the magnitude of the number suggests questions Republicans don’t want to answer. The fact is spending and revenue numbers are not independent variables. In an economic and financial sense, the state has grown, so it’s logical that numbers are going up on both side of the equation, we are earning more and we are spending more.

  2. Submitted by Hiram Foster on 06/06/2011 - 10:43 am.

    Here is a question I have been asking in various forms of various people.

    Is the budget as enacted by Republicans even viable? If it had been signed, could it in practical and legal terms have been implemented into law? Or does it require the state to do things it simply cannot do?

  3. Submitted by Steven Prince on 06/06/2011 - 10:59 am.

    This is a useful post for understanding the history of how we got to the Republican and Democratic buget totals, but I am still waiting to see an explanation of the difference in funding for specfic programs between the two proposed budgets.

  4. Submitted by Archer Grant on 06/06/2011 - 11:09 am.

    I’ve always found putting the budget in terms of Gross State Product helps to simplify the budget. Roughly it translates into “how much of our state economy do we spend?” here’s a chart (though it is dated);

    http://captaincapitalism.blogspot.com/2010/12/minnesota-state-spending-as-percent-of.html

  5. Submitted by Jeff Wilfahrt on 06/06/2011 - 11:09 am.

    Mr. Grow,

    The job creators like to cook the books. There is no surprise here… watch them pull a rabbit out of their hats.

    Now what would really be interesting to check out are the tax returns of this cadre of GOP personal. There would be some really creative math in those documents.

    Jeff Wilfahrt, Rosemount, MN

  6. Submitted by scott cantor on 06/06/2011 - 11:24 am.

    I have a big problem with people throwing out numbers in billions or (at the federal level) in trillions.

    First, what is a billion? Does anyone really know? Have you ever counted to a billion? Or a million? It’s orders of magnitude beyond what we can reasonably comprehend.

    Second, when discussing amounts for government, as we do with budgets and tax receipts, the big number reflects neither change due to inflation nor population increase.

    So even in a story such as this, where you purport to try to explain the differences between 39 or 31 or 34.5, it doesn’t help us at all. Guess what: 39 billion is A LOT. So is 31. And so is 20 and 10 and 2. Maybe we should have a 1 billion dollar state budget–that’s a HUGE number, possibly even within our means, if I knew what our means were.

    Could the media do us a favor and perhaps start talking about these things in terms that people can understand? Here’s a thought: present it in #amount per resident. Or per household. Or per working age citizen. I have no clue what a cut of $306 million to higher ed means to me, but I might have a stronger opinion about gutting the U of M and MNSCU to save me $70 per year in taxes when I’m already paying $150 per year less for higher ed than I used to.

  7. Submitted by Kevin Watterson on 06/06/2011 - 11:39 am.

    That is available here: http://www.house.leg.state.mn.us/fiscal/files/CCcomparison11.pdf (PDF)

  8. Submitted by David Greene on 06/06/2011 - 01:19 pm.

    @Kevin

    That doesn’t help too much, unfortunately. The numbers are at the department level so there’s no sense of what is actually being cut.

    Transit, for example, would lose almost all of its state funding under the Republican bill but that’s not reflected anywhere in the document.

    I suspect a few suburbanites would be a bit peeved if their bus route suddenly went away.

  9. Submitted by Hiram Foster on 06/06/2011 - 01:48 pm.

    There are all kinds of ways in looking at these numbers. The way I would suggest looking at them is in terms of the services they provide and the cuts in those services that would have to be made if the GOP budget bills were adopted. Mr. Watterson who is the director of GOP house media services is very happy when the focus is on the numbers themselves, and not what they actually mean for folks, like you or me, or even for Mr. Watterson. That’s why, as a rule, I shouldn’t even be talking about this stuff, it’s something of a violation of message discipline. But I don’t think it matters too much here.

  10. Submitted by Hiram Foster on 06/06/2011 - 01:57 pm.

    I do think the media can do a better job of explaining what these numbers mean, but Mr. Grow has made a good start here.

    Education is my personal concern, and what I can tell you is that the overall funding numbers in the Republican house bill are good, and quite frankly not that different from Dayton’s. What’s more problematic is how the money is divided, basically money is shfifted from urban and inner ring suburban schools to rural and charter schools, not a result that makes me happy, but that’s a topic for another day. The strategic and tactical problem with the education funding isn’t with the numbers themselves, rather that funding education at that level given overall funding constraints just isn’t tenable, something I suspect Rep. Garofalo, chair of the house education finance committee, in his heart of hearts knows very well.

    Where education is concerned, Republicans always have pies in the sky available. The trick is finding a way to bring them back to Earth.

  11. Submitted by Hiram Foster on 06/06/2011 - 04:23 pm.

    Here is a video from the Taxpayers League that claims the Republican budget increases state spending by 12%, not 6% which is the usual boilerplate Republican claim:

    http://www.youtube.com/watch?v=zY9mspYKgPo&feature=player_embedded

    You get the 12% spending growth number by pretending the state didn’t spend the stimulus money, and the money borrowed from local school districts by the shift. Republicans get the 6% number by pretending the shift was revenue spent by the state, not a loan.

  12. Submitted by David Willard on 06/06/2011 - 08:22 pm.

    When the Loony left and their minions in the press stop complaining of “cuts” made when budgets are actually being INCREASED, then I’ll start listening, till then it’s all disingenuous BS. Have fun name-calling. I’m going up north. NO COMPUTERS! NO TV! NO NEWS PAPERS!

  13. Submitted by Eric Larson on 06/06/2011 - 09:38 pm.

    Dear Doug-

    I have to be one of your most consistant detractors. This was an excellent article. Keep it up.

  14. Submitted by Hiram Foster on 06/07/2011 - 06:12 am.

    “When the Loony left and their minions in the press stop complaining of “cuts” made when budgets are actually being INCREASED, then I’ll start listening, till then it’s all disingenuous BS.”

    Republicans have always wanted to make this a discussion about words and numbers instead of what those words and numbers mean. And that’s the trap I fall into, when I accept their invitation to talk about those things. But here it goes anyway.

    The GOP budget is at 34. We spent 34 in the current biennium. In terms of flat numbers the budget is roughly the same. As for “cuts”, the deficit is at 5.1. That’s a Republican number by the way. You can address a deficit in three ways or some combination thereof. You can raise revenues, borrow, or cut expenses. Since the GOP isn’t doing either of the first two, and assuming their budget is balanced, a real big assumption, they must have done the third. That’s the logic, and it is compelling.

  15. Submitted by Bernice Vetsch on 06/07/2011 - 12:33 pm.

    We mustn’t forget that Pawlenty CREATED the shortfall he wanted by signing the spending bills first and the vetoing the revenue bill.

    The shortfall then “forced” Pawlenty to unallot as he pleased and where he pleased.

  16. Submitted by James Hamilton on 06/07/2011 - 08:26 pm.

    My reading of the numbers found in the link posted by Mr. Watterson is that Dayton and the Legislature are about $700 million apart on health and human services and $600 million apart in the cost of state government. Surprisingly, the legislature’s number for H/H in the second year of the biennium is $236 million more than Dayton’s. If I’m reading this correctly, the conference bill was higher than either the house or senate H/H bills.

    Dayton’s budget on state government was $40 million less than forecast for ’12-’13 and $50 million less than forecast for ’13-’14. The conference bill for ’12-’13 is a whopping $300 million less than forecast and about $380 million less than forecast for ’13-’14. I guess they were looking for a way to pay for a stadium where formed state employees could live when the Vikes aren’t playing.

  17. Submitted by James Hamilton on 06/07/2011 - 08:50 pm.

    Quick fact: Assuming a population of 5,303,000 and a deficit of $1,800,000,000, we’re short $340 per person or $170 per person per year. Less than 50 cents a day per person.

    Gimme’ a break.

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