Legislative Wrap 2009
It has been nearly a month since the conclusion of the 2009 session. I have spent the past few weeks listening to the many different reactions to the session. With humility, I want to share with you my perspective on the session, the balanced budget we presented to the Governor, and the importance of the work ahead to shape a positive future for Minnesota
Throughout the winter and spring, and as the magnitude of the global recession became apparent, I worked with my colleagues to address the state's budget deficit. Just as families across Minnesota are adjusting to address our new economic reality, the State must do the same. But I believe that deep cuts will actually slow our economic recovery versus a targeted tax increase paired with cuts. From the beginning, I argued for a balanced budget approach employing smart cuts, limited ongoing revenue, and protection of core services.
The House produced a balanced budget with deep, but strategic, cuts and limited ongoing revenue in the form of targeted tax increases. We listened carefully to advocates and citizens to understand how to make those cuts responsibly. It was a budget focused not only on cuts, but reforms -- including eliminating public spending on tax preferences that benefited only some Minnesotans; reforming dental services, personal care assistance and public health care programs; and making more than $500 million in cuts to hospitals, nursing facilities and providers while protecting access to care the most vulnerable among us. In total, the Legislature cut $1.6 billion -- $100 million more than the Governor proposed.
To prevent catastrophic cuts to basic services, both the Legislature and the Governor proposed new revenue. But our proposals were starkly different. The Governor proposed borrowing $1 billion against future state revenues, forcing Minnesotans to pay the $600 to $800 million in interest on the debt over the next 20 years. The House rejected this proposal in a bi-partisan and nearly unanimous vote of 131-2.
The Legislature passed two bills that included ongoing revenue. The first raised $1.5billion; the second, in an effort to compromise with the Governor, raised just under $1 billion - the same amount as his borrowing proposal. Instead of borrowing, our plan was mostly comprised of a small income tax increase on those earning over $250,000 per year -- a joint filer earning $300,000 per year would have paid $109 more per year in taxes.
The session ended without a budget agreement, largely because of the fundamental difference between the two plans to raise revenue. Do we borrow to pay for ongoing operations, or use taxes to pay for ongoing operations? It is an important strategic question for Minnesota as we struggle through this recession.
The Governor signed our budget bills, but vetoed the revenue bills that paid for them, putting the budget out of balance and effectively ending the session without a balanced budget. We worked to override the veto of the compromise tax bill, but the attempt failed on a party line vote.
The Governor will now use "unallotment" to unilaterally close the budget by himself, making additional cuts on top of the substantial cuts the Legislature already passed into law. These cuts will have a significant impact on the lives of many Minnesotans and be most harmful in the areas of education and health care – the top priorities the Legislature worked to protect. The Governor's cuts will likely cause the loss of over 10,000 jobs at Minnesota schools and hospitals, increase tuition at colleges and universities, and spark significant property tax increases.
The Governor began his go-it-alone budget cut strategy with his line-item veto of the General Assistance Medical Care (GAMC). Minnesotans served by GAMC earn less than $8,000 annually and more than 70% of them have a chronic health condition. According to the Commissioner of Human Services, these are “the poorest of the poor, the sickest of the sick.” The Governor's veto of this program kicks 30,000 vulnerable Minnesotans off of health care.
The Governor argues that health care costs are growing at an unsustainable rate, and I share that view. Last session, we worked with the administration to adopt legislation to slow growth in health care costs, and our efforts are now a national model. That work is progressing and will, over time, produce both a healthier population and cost savings.
Unfortunately, his veto of GAMC will hinder that progress. Minnesotans getting basic health care through GAMC today will continue to seek and receive care at Minnesota hospitals, but now the costs will be shifted to those of us currently paying for health care; premium payers, property tax payers, employers and employees. The line item veto puts tremendous financial pressure on hospitals already stressed by the weak economy and does nothing to solve the underlying cost problem. It simply shifts the cost - in effect, a tax increase.
In a defining moment of the session, every House Republican stood with the Governor to kick 30,000 Minnesotans off of health care, voting to reject the House's override of the Governor's financially irresponsible and morally reprehensible veto. Just hours later, they stood with Governor again, upholding his veto of our revenue bill that protected hospitals, schools and nursing homes with an income tax increase on the wealthiest Minnesotans. (Here is a link to floor debate on the evening we sought the override of the GAMC line-item veto (http://tinyurl.com/knjqy9)).
The Legislature made many compromises with both the Governor and Republicans in the House and Senate. The Governor wouldn’t come to the table, refusing to agree to anything other than borrowing or deeper cuts. While I strongly favored reaching an agreement, I could not agree to the cuts proposed in the Administration's budget - the cuts were too deep and too fiscally irresponsible.
I strongly disagree with the Governor's planned unallotment to balance the budget unilaterally. This action is rash and erodes the fundamental balance of power between the legislative and executive branches. That said, now the Governor must act, and longer he waits, the more unpredictable Minnesota's future becomes, further destabilizing our economic recovery.
I am already working with my colleagues preparing for next session, continuing our focus on reform. I have met with the folks at Regions Hospital, the St. Paul Chamber, Ramsey County, as well as Mayor Coleman and many constituents. I have met with the Department of Human Services and the Department of Health as we work to understand and shape national health reform efforts.
Let me be clear - unallotment does not solve our budget woes by any means. We will likely face another budget deficit next year, and my focus will continue to be on reform, so that we may protect core services while providing the best value to our constituents. We will continue on a path to a sustainable budget and economic recovery. I remain committed to an honest and results oriented debate about our fiscal health and our commitment to opportunity for every Minnesotan.
I am grateful to you for your advice and your best thoughts. As always, I appreciate your candor and your willingness to both challenge my thinking and consider other perspectives. I look forward to our continued conversation.
