Faust Article on Unallotments

Tuesday, June 23rd, 2009 at 5:34 am

(The following is an article written by Rep. Tim Faust)

The Governor has recently announced his unallotment plans, which will cut $2.7 billion out of the state budget. These cuts will come on top of the nearly $2 billion in cuts the Legislature made this session and will affect our schools, hospitals, nursing homes, jobs and property taxes. I want to provide you with some specific information about the cuts and the local impact.

$1.7 billion will be cut from the budget through a delayed payment to our K-12 schools. Also known as a funding shift, this will force some schools to use short-term borrowing, cut their budgets further, or both. It will cost schools between $30-40 per pupil.

The shift is particularly harmful to schools with low budget reserves, such as Ogilve and East Central. In the final budget balancing bill the Legislature sent to the Governor, we set aside funding to help schools with low budget reserves absorb the shift. We also made a guarantee to all schools that the shift would be paid back in full once the economy recovers. Unfortunately, it was vetoed.

$100 million will be cut from higher education as well, which will mean tuition increases at the University of Minnesota and MnSCU campuses. The Legislature had used targeted federal recovery dollars to hold tuition increases down to 3%, but the Governor’s unallotment will likely push tuition up higher.

Local government aid (LGA) will be cut by $300 million in the unallotment plan, which will result in significant property tax increases for Greater Minnesota. The following local cuts include: Kanabec County – $417,988, Pine County – $569,800, Isanti County –  $1,082,706, City of Mora – $148,500, Pine City – $169,473, Braham – $103,480, Hinckley – $78,808.

These cuts are especially difficult for our cities and counties because the Governor already unalloted over $100 million from LGA in December of last year. The continual pressure on local property tax payers to balance the budget is not sound economic policy, especially given the current home foreclosure crisis.

The Governor also cut the renters’ credit program by $50 million. It will mean higher property taxes for renters, and hit seniors living on fixed incomes especially hard. The tax increase for renters will actually be larger than originally anticipated, costing the average renter about $150 more in taxes.

$239 million will be cut from health care, on top of the over $900 million already cut this session (about $550 million by the Legislature and $380 million more from the Governor’s General Assistance Medical Care line-item veto). Hospitals will be cut $82 million and nursing homes will be cut $13 million. This will likely trigger significant job losses. Other programs that were significantly cut include: elimination of GAMC six weeks sooner ($15 million), medically prescribed diets for disabled ($5.3 million), disabled person care attendants ($7.5 million), critical access dental ($6.2 million), county mental health grants (S8.1 million).

I have already began and will continue to meet with local officials at the city and county level, as well as with local business owners and homeowners about the unallotment cuts. It will be critical over the coming months for us to gather information and determine to the full extent how these cuts will impact Minnesotans and our economy so that we can move forward in a responsible and proactive manner.

If you have any questions or have input, you can reach me at (651) 296-0518, , or by mail at 567 State Office Building, St. Paul, MN 55155.

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