January 30 , 2013 Presented by: Minnesota Senate Fiscal Staff

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

January 30, 2013Presented by: Minnesota Senate Fiscal StaffMinnesota Senate, Office of Counsel, Research and Fiscal Analysis

Minnesota State Budget: Status, Components & Overview

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISPresentation Outline

• Fiscal Staff, Fiscal Notes, Revenue Estimates and Basic Information

• Recap the November 2012 State Budget Forecast — General Fund

• Budget Overview– “All Funds”– General Fund– Overview of individual budget areas

Unless otherwise noted, all figures reflect FY 2014-15 projections, based on the November 2012 budget forecast.

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Minnesota Senate Fiscal Staff,Committee Assignments

E-12 Education Finance Division Jay Willms, 296-2090

Environment, Economic Development & Agriculture Finance Division

David Jensen, 296-2500Daniel Mueller, 296-7680

Health and Human Services Finance Division Dennis Albrecht, 296-3817

Higher Education & Workforce Finance Division Maja Weidmann, 296-4855

Judiciary Finance Division Chris Turner, 296-4350

State Departments & Veterans Finance Division Kevin Lundeen, 296-2727

Transportation & Public Safety Division Krista Boyd, 296-7681Chris Turner, 296-4350

Capital Investment Committee David Jensen, 296-2500

Tax Committee Shelby McQuay, 296-5259

Finance Committee Eric L. Nauman, 296-5539

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISRole of Legislative Fiscal Staff

• Analyze spending and revenue proposals, including modeling of many proposed education and tax law changes.

• Request and interpret Fiscal Notes and Revenue Estimates; interface with state agencies to ascertain information in support of the policy process.

• Draft budgetary legislation.

• Track budget proposals and decisions using Spreadsheets.

• Support legislative oversight of enacted budgets.

5

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISTypes of Appropriations

• Direct Appropriation is an appropriation made in biennial or annual budget bills and is for a limited period of time, usually within the biennium.

• Statutory Appropriation refers to the authority to spend resources that is codified in state statute, rather than session laws. This means the expenditure authority is ongoing and not dependent on the passage of an appropriations bill each biennium.

• Open Appropriation refers to the authority to spend an unspecified amount of resources to meet a program's objective or a constitutional requirement. These resources are typically made available when an agency provides a forecast of the estimated need. These open appropriations are reported in the Governor's biennial budget as " Open Appropriations”.

• Standing Appropriation is the authority to spend a pre-determined dollar annual amount for an activity for a specific period of time or indefinitely. (Example: MS 240A.08 Appropriation….”$750,000 is appropriated annually from the general fund to the Minnesota amateur sports commission for the purpose of.….”

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISHow Do I Find the Cost of My Bill?

• Fiscal Notes– A Fiscal Note is a formal document prepared by state

agencies and coordinated by the Department of Finance that provides estimates the costs, savings, revenue gain, or loss resulting from the implementation of proposed legislation.

• Revenue Analysis– A Revenue Analysis is a formal document prepared by

the Department of Revenue that provides estimates of revenue changes for both state and local governments from proposals to change tax laws

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Use of Fiscal Notes/Revenue Estimates in the Legislative Process

• Fiscal Notes: Minnesota Statutes 3.98– Fiscal note examines spending and fee changes– Fiscal note requested by committee chairs– MMB coordinates and signs off

• Local Impact Notes: Minnesota Statutes 3.987-3.989– Local impact note examines fiscal impact of proposed law change on counties, cities, school

districts and any other local governments– Local impact note requested by tax, finance or ways & means committee chairs or ranking

minority members– MMB coordinates

• Revenue Estimate: Minnesota Statutes 270C.11, subd. 5

– Revenue estimate examines tax changes– Revenue estimate requested by tax committee chairs or ranking minority members– DOR is responsible

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISFiscal Note Requirements

1. cite the effect in dollar amounts 2. cite the statutory provisions affected3. estimate the increase or decrease in revenues or

expenditures4. include the costs that may be absorbed without additional

funds5. include the assumptions used in determining the cost

estimates6. specify any long-range cost implications.

The fiscal note may comment on technical or mechanical defects in the bill but may not express opinions concerning the merits of the proposal.

MMB prescribes a uniform procedures that govern all agencies.

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISRequesting a Fiscal Note

• In the Senate a fiscal note request may be entered into the system by any nonpartisan fiscal analyst or the committee administrator of the Senate Finance Committee.

• Legislators are advised to discuss the need for a fiscal note on a bill with legislative fiscal staff– Does the bill have a fiscal impact?– Is a fiscal note or revenue estimate needed?– Is the fiscal impact obvious and a fiscal note not needed?– Will significant amendments be proposed?

Other Considerations– Bill hearing schedule– Bonding bills– Education bills

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FY 2013 FY 2014 FY 2015

July 1, 2013 July 1, 2014

Legislative session

Governor’s biennial budget submission

Legislative session

FY 2014-15 biennial budget enacted

Legislative session

November 2012

Forecast

February 2013

Forecast

November 2013

Forecast

February 2014

Forecast

February 2015

Forecast

November 2014

Forecast

Governor’s capital budget

submission

FY 2014-15 supplemental budget

actions enacted

OFFICE OF COUNSEL, RESEARCH, AND FISCAL ANALYSISThe Biennial Budget Calendar

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISGeneral Fund Budget Forecast

• Current Biennium (FY 2012-13) — zero budget balance. Not negative, not positive.

• FY 2014-15 — $1.1 billion deficit after carryforward.

• Budget “Tails” (FY 2016-17) — A positive balance of $263 million projected in the planning years

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General Fund Budget ForecastNovember 2012

FY 2012-13 Biennium FY 2014-15 Biennium FY 2016-17 Biennium$0

$10

$20

$30

$40$35.1

$36.8$38.6

$36.2$37.8 $39.4

Projected General Fund Resources & SpendingResources Spending

Billions

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General Fund Budget ForecastNovember 2012

FY 2012-13 Biennium

FY 2014-15 Biennium

FY 2016-17 Biennium

-$4

-$2

$0

$2

$0.0

-$1.1 -$0.8-1.1

0.2

Projected General Fund Balance

Budgetary BalanceStructural Balance

Billions

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISBudgetary Balance Over Time

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(6,000)

(4,000)

(2,000)

0

2,000

(2,290)

(4,229)

(160) (466)

88

2,163

(935)

(4,570)

(3,425)

(5,020)

0

(1,090)

Budgetary BalanceBased on Feb Forecast For Each Legislative Session*

Legislative Sessions 2002-2013Dollars in Millions

Legislative Session*Budget balance as projected by Feb forecast for subsequent biennium in odd numbered years

and for current biennium in even numbered years.

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Structural Balance:Current Revenues vs. Current Spending

• Spending exceeds revenues.

• One-time solutions used to address ongoing budget gaps.

• Projected improvement in budget tails.

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Revenues 14,620 15,873 17,086 17,858 17,603 18,189 19,078 19,632

Spending 14,627 15,640 16,579 18,642 18,418 18,447 19,049 19,390

Difference (7) 233 507 (784) (815) (258) 29 242

Estimated Inflation

276 614 968 1,393

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISState Budget Structure

• Approximately 126 “Funds” established in law (funds may be created by Constitution or Statute).

• “All Funds” refers to the roughly 39 funds that support biennial operations.

• General Fund is largest fund; required to be balanced, tends to be the focus of budget deliberations and of public-media attention.

• Within Funds may be various Accounts, along with Programs, Activities, & lower levels of detail.

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OFFICE OF COUNSEL, RESEARCH, AND FISCAL ANALYSISBudget Overview

Individual Income Tax26.5%

Federal Grants30.6%

Sales Tax16.4%

Corporate Tax3.0%All Other

Taxes4.8%

Statewide Prop. Tax2.6%

Gasoline & Spec Fuels Taxes2.7%

Health Care Taxes1.6%

Motor Vehicle Sales Tax1.9%

Motor Vehicle License Tax1.8%

Fees & Charges

3.8%

All Other Revenues

4.3%

All State Revenues, By Source -- FY 2014-15Total Revenues = $65.7 Billion

November Forecast, 2012

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All Operating Funds, By Fund Type -- FY 2014-15Total Spending = $64.6 Billion


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All Operating Funds, By Omnibus Spending Bill -- FY 2014-15Total Spending = $64.6 Billion


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General Fund Resources -- FY 2014-15Total Revenues = $35.8 Billion


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General Fund Spending -- FY 2014-15Total Spending = $36.8 Billion


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19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

20132014

20152016

2017

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Expenditures -- All FundsGeneral Fund & Other Funds

November Forecast, 2012 --Actual Dollars

All Other General FundFiscal Years

Dolla

rs in

Bill

ions

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FY 1991

FY 1992

FY 1993

FY 1994

FY 1995

FY 1996

FY 1997

FY 1998

FY 1999

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Price of GovernmentState & Local Revenue as Percent of Personal Income


State Local Total

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State Tax Revenues

Presented by:

Shelby McQuayFiscal [email protected]

mailto:[email protected]

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• All bills relating to taxes and tax aids and credits

• The Budget Reserve

• Tax Increment Financing

• Fiscal Disparities

• Payment in Lieu of Taxes (PILT)

• Tax Court

Tax Committee Jurisdiction

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State Revenues, FY 2014-15

• All Funds = $65.7 billion in FY 2014-15 • General Fund = $35.8 billion in FY 2014-15


TAXES94.5%

NON-TAX REVENUES3.9%

TRANSFERS1.6%

Based on the November 2012 Forecast

GENERAL FUND53.5%

LEGACY0.9%

HEALTH CARE ACCESS

2.0%

MAIN TRANS.

RE-LATED FUNDS

7.3%

FEDERAL29.6%

OTHER7.5%

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISGeneral Fund Tax Revenues, by Type

INCOME51.6%

SALES30.0%

CORPORATE5.8%

STATEWIDE PROPERTY TAX 5.0%

ESTATE0.9%

ALCOHOL & TOBACCO1.6%

MORTGAGE & DEED1.1%

INSURANCE PREMIUMS1.9%

OTHER2.0%

$33.8 billion for FY 2014-15

Based on the November 2012 Forecast

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History of Major Taxes (% Share)FY 1962-2015

62

63

64

65

66

67

68

69

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

0 1 2 3 4 5 6 7 8 9 10

11

12

13

14

15

0%

10%

20%

30%

40%

50%

60%

Income Tax Sales & MVET Net Property Other Taxes

Fiscal Years

Perc

ent

14.5%

0.0%

53.6%

31.9%31.6%

28.4%

22.4%

17.6%

2001 ReformFY 02 FY 03

Income 29.7% 29.9%Sales 24.7% 26.0%PTX 29.3% 25.6%Other 16.2% 18.4%

Source: Minnesota Department of Revenue andPrice of Government, November 2012

42.3%

26.5%

19.9%

11.4%

MinnesotaMiracle

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISMinnesota Individual Income Tax Brackets

2013 Tax Rates and Brackets

Rates Income

Married Joint Married Separate Single Head of Household 5.35% $0 - $35,480 $0 - 17,740 $0 - 24,270 $0 - 29,880

7.05% $35,480 - 140,960 $17,740 - 70,480 $24,270 - 79,730 $29,880 - 120,070

7.85% $140,960 and over $70,480 and over $79,730 and over $120,070 and over

Note: Head of household filers are single filers with dependents.

• Alternative Minimum Tax (AMT): Broader Tax Base and lower rate [6.4%]

• Taxpayer pays whichever calculation results in a greater tax liability

• Proceeds go to the general fund - $17.44 billion in FY 14-15

• Starting point: Federal Taxable Income

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• Proceeds go into the General Fund - $1.95 billion in FY 14-15• Combined reporting for unitary groups• Beginning tax base: Federal Taxable Income• Tax is applied to the amount of income apportioned to Minnesota• Tax rate = 9.8% (AMT = 5.8%)• Minimum fee ($0-$5,000)

Corporate Franchise Tax

Tax Year Sales Property Payroll

2010 87% 6.5% 6.5%

2011 90% 5% 5%

2012 93% 3.5% 3.5%

2013 96% 2% 2%

2014 100% 0 0

Phase in of Sales Apportionment

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• Sales and Excise Tax - $10.12 billion in FY 14-15• Proceeds go to the General Fund and the Legacy Funds• General rate = 6.5%• Constitutional amendment rate = 0.375%• Total Rate = 6.875%• Certain purchases are subject to exemptions• Business, government and nonprofit also qualify for certain exemptions

• Other State Taxes – $2.65 billion in FY 14-15• Estate Tax• Insurance premium taxes• Cigarette and tobacco taxes and fees• Alcoholic beverage taxes• Mortgage registry tax• Deed transfer tax• Motor vehicles sales tax• Motor vehicles lease tax• Motor vehicles fuels tax• Minnesota care taxes

Other State Taxes

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS• Proceeds go to the General Fund - $1.68 billion in FY 14-15• Tax levied on two types of properties:

• 95% on Commercial Industrial (CI) • 5% on Seasonal Recreation Residential (SRR) property

• $852 m in CY 2013; increases annually by an inflation factor

State General Levy

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Health and Human Services

Presented by:

Dennis AlbrechtFiscal [email protected]


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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISHealth and Human Services

• Department of Human Services• Department of Health• Health Insurance Exchange• Emergency Medical Services Board• Council on Disability• MH/DD Ombudsperson• Ombudsperson for Families• Health Related Boards

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General Fund Allocations, FY 14-15

Department of Human Ser-

vices; 11122756; 99%

Department of Health, $152,189, 1%

EMSRB, $5,484, 0%

Council on Disability, $1,048 , 0%

MH/DD Ombudsperson; 3308; 0%

Ombudsperson for Families; 530; 0%

Nursing Home Admin Board; 20; 0%

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISDepartment of Human Services

General Fund Allocations, FY 14-15

Basic Health Care; 5367321;

48%

Children & Family Services; 1066693; 9%

Central Office Operations; 201271; 2%

LTC Facilities & Waivers;

3786763; 34%

Chemical & Mental Health; 344892; 3%

Sex Offender Program; 146152; 1%

State Operated Services; 370640; 3%

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MA Average Monthly Recipients (2012)

Elderly; 56891; 8%

Disabled; 122381; 17%

Children & Parents;

471074; 64%

Adults w/o Children; 82486; 11%

Monthly Average Total: 732,832

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MA Expenditures (2012)

Elderly; 1611000; 20%

Disabled; 3680000; 45%

Children & Parents;

2116000; 26%

Adults w/o Children; 832000; 10%

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Children & Family Services, FY 14-15

MFIP/DWP; 151623; 14%

MFIP Child Care, $138,421 , 12%

GA; 109825; 10%

GRH; 287078; 27%

All Other; 131405; 12%

Child & Comm Svc, $128,602 , 11%

BSF Child Care, $89,670 , 8%

Children's Services; 97014; 9%

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISDepartment of Health

• Administers WIC and family home visiting programs• Operates breast and cervical cancer screening

programs• Regulates health and long-term care facilities• Investigates reports of maltreatment of adults• Regulates HMOs and county based purchasing plans• Operates state registrar—birth and death records• Monitors drinking water quality• Detects, investigates and mitigates infectious

disease threats and outbreaks• Administers newborn screening program• Coordinates state response to major emergencies

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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISDepartment of Health

All Funds Allocation, FY 14-15

General Fund; 148721; 14%

SGSR; 91338; 9%

Health Care Access; 21886; 2%

Special Revenue; 149021; 14%

Federal & TANF; 488843;

47%

MERC; 132066; 13%Other; 931; 0%

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Other Agencies

• Health Insurance Exchange• Emergency Medical Services Board• Council on Disability• MH/DD Ombudsperson• Ombudsperson for Families• Health Related Boards

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Other Agencies, All Funds Allocation, FY 14-15

SGSR; 34142; 28%

Special Revenue; 4598; 4%

Gift; 27; 0%

Federal; 70669; 59%

General; 10388; 9%

Health Insurance Exchange$69,938 Federal

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Higher Education

Presented by:

Maja WeidmannFiscal [email protected]


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SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISHigher Education

General Fund Distribution, FY 14-15

General Fund98%

Other Funds2%

MnSCU42%

Univ. of MN42%

Of -fice of

Higher Ed15%

Mayo MF0%

NOTE: Mayo Medical Foundation appropriation < 1% of total GF appropriation for higher education

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Higher Education - Base BudgetFY 14-15, dollars in 000s

Office of Higher Education

State Grant $309,250

Work Study $29,004

Child Care Grant $13,368

MNLink/Minitex $11,210

Tuition Reciprocity $6,500

American Indian Scholarship $3,700

Get Ready/ICAP $1,702

Other Small Programs/Admin $6,408

University of Minnesota

Operations and Maintenance $967,762

System Specials $122,926

Minnesota State Colleges and Universities

Ops and Maintenance/Learning Network $1,024,582

Central Office/Shared Services $66,148

Mayo Medical School

Mayo Medical School $1,330

Mayo Family Practice $1,372

TOTAL $2,565,262

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University of Minnesota

• Five Campuses: Twin Cities, Crookston, Duluth, Morris, Rochester

•82,303 students UDH (credit courses), 64,283 FYE (2011-12)

•Annual Undergraduate Tuition (System Average): $12,572 (2012-13)

U of M FYE Enrollment Twin Cities Campus Tuition

FY 00

FY 01

FY 02

FY 03

FY 04

FY 05

FY 06

FY 07

FY 08

FY 09

FY 10

0

20000

40000

60000

80000

100000

120000

140000

160000

FY 00

FY 01

FY 02

FY 03

FY 04

FY 05

FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

0

2000

4000

6000

8000

10000

12000

48


Minnesota State Colleges and Universities

• 32 Colleges and Universities (25 two-year colleges, 7 state universities)

•275,742 students UDH (credit courses), 431,351 (non-credit courses) [Note: students enrolled in both credit and non-credit courses counted in credit headcount only]; 153,447 FYE (2011-12)

•Average Tuition (2012-13): Colleges: $4,816; State Universities: $6,782

FY 00

FY 01

FY 02

FY 03

FY 04

FY 05

FY 06

FY 07

FY 08

FY 09

FY 10

0

20000

40000

60000

80000

100000

120000

140000

160000

FY 00

FY 01

FY 02

FY 03

FY 04

FY 05

FY 06

FY 07

FY 08

FY 09

FY 10

FY 11

0

2000

4000

6000

8000

10000

12000

FYE Enrollment Tuition

State Universities

State Colleges

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Office of Higher Education

Financial Aid Services-State Grants and Loans

Licensing and Credentialing of Institutions

Student Data Tuition Reciprocity

Agreements

Program Funding (2014-2015)

State Grant Agency Administration

Get Ready/ICAP/Info Child Care

Work Study Minitex/MNLink

Am. Indian Scholarship Reciprocity

Other Small Programs

81%

19%

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• Issues tax-exempt revenue bonds to assist non-profit and public higher education institutions finance construction projects on their campuses

• 21 non-profit colleges and universities have utilized this program to construct facilities on their campuses

• Authorized to issue up to $1.3 billion in revenue bonds

Higher Education Facilities Authority

51


State Departments & Veterans

Presented by:

Kevin LundeenFiscal [email protected]


52

All Funds, FY 2014-15Base Budget, $1.5 billion (2.3% of all funds)

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISState Departments and Veterans

General 60%

Special Revenue24%

Federal14%

Other2%

53


Fund FY 14-15General 902,916 State Government Special Revenue 5,008 Special Revenue 354,051 Health Care Access 3,754 Gift 1,132 Trunk Highway 1,200 Highway Users Tax Distribution 4,366 Environmental 869 Remediation 500 Workers Comp 14,500 Federal 208,874 Total All Funds 1,497,170

All Funds FY 14-15 Base Budget(dollars in 000s)

54

General Fund, direct and open, FY 2014-15Base Budget, $936.1 million (2.4% of total General Fund)


Revenue30%

Legislature13%

Veterans Affairs13%

Retirement Funds10%

Constitutional Officers8%

Minnesota Management & Budget6%

Historical Society5%

Administration4%

Military Affairs4%

Arts Board2%

Office of Enterprise Technology1%

All Others 3%

Note: Indirect costs receipt offset not reflected in graph

55


State Departments and Veterans

General Fund, Direct and Open, FY 14-15 Base Budget(dollars in 000s)

FY 14-15Base

Revenue 280,838Legislature 126,162Veterans Affairs 121,240Retirement Funds 92,980Constitutional Officers 76,746Minnesota Management & Budget 54,430Historical Society 48,331Administration 38,233Military Affairs 39,464Arts Board 15,012Office of Enterprise Technology 11,958All Others 30,732

Total General Fund Expenditures 936,126Indirect Costs Receipts offset (35,188)

Net General Fund Expenditures 900,938

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AGENCY BILLING

A number of state agencies charge for services provided to another agency either directly or indirectly.

These charges are not reflected in the Consolidated Fund Balance because they are existing state operating budget dollars that move from one agency to another to pay for services, however they do represent a significant portion of agency operating budgets . Service agencies generally have statutory authority to charge for services and spend the payments received.

• Attorney General – legal services billings account for 24% of the operating budget

• Administration – internal support services such as insurance, motor pool, mail and leasing of state buildings account for more than 60% of the operating budget

• Office of Administrative Hearings (OAH) – administrative hearing billings account for 22% of the operating budget

• Minnesota Management & Budget (MMB) – state employee benefit programs, consulting, budget and accounting services account for more than 97% of the operating budget

• Office of Enterprise Technology (OET also referred to as MN.IT) – executive branch information technology consolidation in 2010 budget bill, service level agreements with agencies to manage all projects and staff, 65% of budget from billings

• Investment Board – investment of state retirement funds, trust funds and cash accounts account for 95% of the operating budget

• Governor’s Office - intra-agency agreements for policy staff and other related expenses

57



Internal Service Funds – ExamplesDollars in 000s

Administration FY 14-15 Forecast

Risk Management

25,502

Plant Management

128,456

Fleet & Surplus Services

26,684

Materials Management

27,362

subtotal Admin:

208,004

Office of Enterprise Technologies(also referred to as Mn.IT)

Enterprise Technologies Fund

875,295

Minnesota Management & BudgetStatewide Insurance Programs (SEGIP & PEIP)

1,633,111

58


Property Tax Aids & Credits

Presented by:

Shelby McQuayFiscal [email protected]


32%

23%

3%10%

28%

4%

Counties

Cities

Towns

State

School Districts

Special Districts

$8.38 Billion in Pay 2013

Counties

CitiesTowns

School Districts

Special Districts

State

Dept. of Revenue, Property Tax Division

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISProperty Tax Levies

60

$2.73 billion in FY 14-15

40%

31%

12%

2%14%

City Aid (LGA)

Ag Market Value Credit

County Program Aid

Other

Based on November 2012 Forecast

Property Tax Refund


State Tax Aids & Credits

61

• Paid to Homeowners and Renters

• Paid to Local Governments:• Cities, Counties, Townships, School Districts and Special

Districts

• Local Aids and Credits pay a portion of the local cost of service delivery and reduce the burden of local property taxes

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISProperty Tax Aids & Credits

62

• $1,105.1 million in FY 14-15

• Open and standing General Fund appropriation

• State partially reimburses homeowners and renters for a portion of property taxes, if property taxes exceed a certain level of household income

• Legislature sets income and property tax thresholds, reimbursement rates, maximum refund amounts

• Targeted PTR provides relief to homeowners whose property tax increase exceeds a threshold percentage set by the Legislature

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISProperty Tax Refund

63

• $854.0 million in FY 14-15

• LGA formula based on city need minus ability to pay

• Large city need based on population decline, age of housing stock, road accidents per capita, location in a metro area and household size

• Ability to pay measured by using city tax capacity, average tax rate


Local Government Aid (LGA)

64

• $332.5 million if FY 2014-15

• Previous county aid programs consolidated into County Program Aid

• County program aid consists of Need Aid plus Tax Base Equalization Aid

• Need aid based on county’s share of age-adjusted population, food stamp households, Part I Crimes


County Aids

65

• $437.2 million FY 2014-15SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

All Other Aids and Credits

FY 14-15 ($000s)

Agriculture Market Value Homestead Credit $46.8

Other Credits $51.9

Aid to Fire and Police $206.7

PILT $51.9

Taconite-related aids $29.3

All Other Aids $50.6

66


Transportation

Presented by:

Krista BoydFiscal [email protected]


67


Transportation

Department of Transportation (MnDOT)• Multimodal Systems (Air, Transit, Freight, Rail)• State Roads• Local Roads• General Support and Services

Metropolitan Council• Metro Transit – Bus, Light Rail and Commuter Rail• Contracted Transit Programs• Transportation Planning

Department of Public Safety• State Patrol• Driver and Vehicle Services• Traffic Safety• Pipeline Safety• Administration and Support

Primary Funding Areas

68


Transportation

Appropriations, All Funds, FY 14-15

42%

19%

17%

8%

5%4%

3%

1% 1%

Trunk Highway, $2,696County State Aid, $1,200Federal, $1,065Transit Asst, $534Muni State Aid, $337Special Revenue, $272General Fund, $178State Airport, $41Other, $39

69


Transportation

Appropriations, General Fund, FY 14-15(less than 0.4% of total General Fund budget)

Metro Transit, $129.9 mill,

71%

Greater MN Transit,

$32.7 mill, 18%

Public Safety, $15.9 mill, 10% MnDOT Other, $1.6 mill, 1%

70


Transportation

Transportation Revenue, Sources and UsesROADS AND BRIDGES

Highway User Tax Distribution Fund

FY 2012 $1.8 billion

Motor Fuel Tax (100%)$ 847 m

Registration Tax (100%)$ 580 m

Vehicle Sales Tax (60%) $ 335 m

Collection CostsDNR & Other

$33 m

Misc. Revenue$2.7 m

Trunk Highway Fund (62%) $1,019 m

County State Aid (29%) $477 m

Municipal State Aid (9%)

$148 m

Town Roads, Bridges & Turnbacks

(5.0% set-aside) $87 m

95% Distribution5% Set-Aside

71


Transportation

Dedicated Transportation Revenues

• Motor Fuels Tax (Gas Tax)– 100% constitutionally dedicated to HUTDF

• Vehicle Registration Tax (Tab Fees)– 100% constitutionally dedicated to HUTDF

• Motor Vehicle Sales Tax (MVST)– Constitutionally dedicated to HUTDF and transit funds– Statutory split as of FY 2012: 60% to HUTDF and 40% to

Transit Assistance Fund (36% metro, 4% greater MN)• Motor Vehicle Lease Sales Tax (MVLST)

– Statutorily dedicated (after Gen Fund set-aside)– 50% to Greater MN Transit, 50% to 5 metro counties for

roads

72


Transportation

Transportation Spending (Funds)

• Highway User Tax Distribution Fund (pass-through fund)– Trunk Highway Fund (62%)– County State-Aid Highway Fund (29%)– Municipal State-Aid Street Fund (9%)

• State Airports Fund– Revenue sources: aviation fuel tax, registration tax,

flight property tax• Transit Assistance Fund

– Revenue sources: MVST, motor vehicle leasing sales tax

73


Transportation

Public Transit Funding• Three state funding sources:

– General Fund - direct appropriation– Motor Vehicle Sales Tax (MVST) - statutory appropriation

– Transit share of MVST split 90% metro, 10% greater MN– Motor Vehicle Lease Sales Tax – statutory appropriation

– Greater MN only• Transit in the 7-county metropolitan area is operated by the Metropolitan Council

(Metro Transit and Metro Mobility) and by several Suburban Transit Providers (“opt-outs”)

• Greater MN transit programs are locally-operated transit services that receive state and federal assistance through MnDOT’s Office of Transit. Of the 80 non-metro Minnesota counties:

– 70 have county-wide transit service– 8 have municipal services– 2 have no transit service

74


Transportation

Metropolitan Transit CY 13 Operating Budget ($464 million)

44%

24%

11%

10%

5% 5%

REVENUES

MVSTFaresGeneral FundOther (incl. Reserves)FederalLocal

61%29%

8%

1%1%

SPENDING

BusContractedLight RailNorthstarPlanning

75


Transportation

Greater Minnesota Transit SystemsCY 13 Operating Budget ($79 million)

36%

31%

18%

15%

REVENUES

Local ShareMVSTGeneral FundFederal

39%

28%

23%

5% 5% 0%

SPENDING

RuralUrbanizedCommuter RailSmall UrbanElderly & DisabledCommuter Bus

76


Transportation

Department of Public SafetyTransportation-Related Programs

• Driver and Vehicle Services– Fee-based operations budget (two operating accounts in Special Revenue

Fund)– Biennial operating budget approx. $110 million

• State Patrol– Funded primarily from Trunk Highway Fund appropriations– Capitol Security funded from General Fund– Biennial operating budget approx. $166 million (including $6.3 million

General Fund appropriation)• Office of Traffic Safety

– Funded through $870,000 biennial Trunk Highway Fund appropriation (required match for approx. $40 million in federal funding)

• Office of Pipeline Safety– Funded through USDOT grant ($3.5 million) and through pipeline safety

inspection fees ($2.7 million)

77


Judiciary & Public Safety

Presented by:

Chris TurnerFiscal [email protected]


78

FY 2014-15 (as % of total budget)SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

Judiciary and Public Safety Budgets

Other96.8%

Judi-ciary & Public

Safety3.5%

ALL FUNDS

Other95.3%

Judi-ciary & Public

Safety4.6%

GENERAL FUND

79

General Fund, FY 2014-15SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

Judiciary and Public Safety

Corrections50.8%

Trial Courts25.9%

Public Safety8.4%

Public Defense7.2%

Supreme Court4.6%

Guardian ad litem1.3%

Court of Appeals1.1%

Human Rights0.4% Other Agencies

0.2%

80


Public Safety – General Fund(dollars in 000s)

Agency FY 2012-13 FY 2014-15Supreme Court 83,249 83,550

Court of Appeals 20,334 20,456

Trial Courts 470,339 473,656

Guardian ad litem 24,134 24,134

Tax Court 1,650 1,650

Judicial Standards Board 1,202 912

Uniform Laws Commission 98 98

Public Defense Board 132,920 131,952

Public Safety (Criminal) 200,711 153,326

Private Detective Board 240 240

Human Rights 6,339 6,336

Corrections 913,033 927,897

Sentencing Guidelines 1,172 1,172

TOTAL Public Safety 1,855,421 1,825,379

81


Public Safety – Special Revenue(dollars in 000s)

Agency FY 2012-13 FY 2014-15

POST Boardsource: criminal fine surcharge

7,990 7,990

Fire Marshal, Firefighter Trainingsource: homeowner fire surcharge

16,250 16,250

Emergency Communication Networksource: 0.80/telephone line 911 fee

137,281 134,666

TOTAL Special Revenue 161,521 158,906

82


Public Safety Budget

• Crime Rate• Arrest Rate• Court Volume• Incarceration Rate• Costs realized at both State and Local level• Budget is personnel-driven, sensitive to salary

increases, health care and pension costs

Major Cost Drivers

83


Environment, Economic Development &

AgriculturePresented by:

Dan Mueller Dave JensenFiscal Analyst Fiscal [email protected] [email protected] 651-296-2500



84


Environment, Econ Development &Agriculture

Environment Budget Area Economic Development Budget Area

Pollution Control Agency 309,950 Dept. Employment & Ec Development 812,203

Department of Natural Resources 616,507 Science & Technology Authority 224

Metropolitan Council - Metro Parks 17,080 Explore Minnesota Tourism 20,238

Minnesota Conservation Corps 980 Housing Finance Agency 76,069

Board of Water & Soil Resources 34,291 Dept of Labor & Industry 270,514

Minnesota Zoo 46,357 Workers Comp Court of Appeals 3,407

Science Museum 2,136 Bureau of Mediation Services 3,168

Commerce Dept 450,565 Iron Range Resources & Rehab Board 84,868

Public Utilities Commission 16,085 Region 3 Occupation Tax 912

Public Facilities Authority 172 Agriculture Budget Area

Agriculture Dept 154,371 (Amounts in thousands $)

Animal Health Board 11,189

Agriculture Utilization Research Inst. 5,286 Total All Agencies $2,936,599

FY2014-15 Base Budget – All Funds

85

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISEnvironment

All Funds Spending, by Fund Total Budget for FY 2014-15 = $1.5 Billion*

General Fund18%

Federal27%

Game & Fish13%

Natural Resources13%

Environmental9%

Special Revenue13%

Remediation5%

Other2%

* Does not include constitutionally dedicated funds

86

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISEnvironment

General Fund Spending, by Agency Total Expenditures for FY 2014-15 = $268.4 Million

Pollution Control Agency

3%

MN Zoo16%

Dept of Natural Resources *

50%

Met Council; Parks2%

Brd of Water & Soil Resources

9%

Science Museum1%

Commerce15%

PUC4%

* Does not include Payment in Lieu of Taxes

87

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISAgriculture

All Funds Spending, by Fund Total Budget for FY 2014-15 = $170.8 Million

General Fund45.0%

Federal9.9%

Special Revenue11.8% Remediation

2.3%

Agricultural31.0%

88

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISAgriculture

General Fund Spending, by Agency Total Expenditures for FY 2014-15 = $76.9 Million

Ag Dept.81% Animal Health Brd

13%

AURI7%

89

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISDedicated Funding

(Dollars in millions $)

FY 2012-13 Appropriations

FY 2014-15 Estimated

From 3/8% Sales Tax

Outdoor Heritage Fund 186.9 191.0

Clean Water Fund 185.4 191.0

Parks and Trails Fund 78.1 82.0

Arts & Cultural Heritage Fund 106.9 114.0

Subtotal 557.3 578.0

From Lottery Proceeds

Environment & Natural Resources Trust Fund 50.6 67.6

Grand Total 607.9 645.6

90

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISEconomic Development

Sources of Funding, FY 14-15Base Budget, $2.4 million

Federal41%

Agency30%

Workers Comp8%

General Fund7%

Workforce Dev4%

Iron Range Resources4%

Special Rev3%

State Govt Spec Rev2%

Other Funds1%

Other funds: Petroleum Cleanup Fund, Remediation Fund, and Gift Fund


FY 2014-15 Spending by Agency (in 000s)

AGENCY: General Fund All Funds

Employment and Economic Development• Business and Community Dev (99 mill)

•Minnesota Trade Office (4 mill)•Unemployment Insurance (129 mill)•Workforce Development (352 mill)•Vocational Rehabilitation (149 mill)•State Services for the Blind (36 mill)•General Support (43 mill)

81,035 812,204

Science and Technology Authority 214 214

Housing Finance Agency• Development and Redevelopment (24 mill)• Supportive Housing (32 mill)• Homelessness Prevention (15 mill)• Homeownership Assistance (12 mill)• Homeowner Rehabilitation (7 mill)• Rental Preservation and Rehab (25 mill)• Rental Assistance (360 mill)

76,096 534,743


AGENCY: General Fund All FundsHousing Finance Agency (Continued)

Residential and Organizational Supt(5 mill)

Administration (56 mill)

Tourism 17,450 20,238

Public Facilities Authority 664,013

Labor and Industry• Workers Compensation Program (165 mill)• Workplace Safety (24 mill)• Code and Construction (58 mill)• General Support (19 mill)• Labor Standards & Apprenticeship (3.7 mill)• Office of Combative Sports (.3 mill)

1,632 270,354

Mediation Services 3,168 3,168

Workers Comp Court of Appeals 0 3,407

Iron Range Resources and Rehab 0 84,868

Region 3-Occupation Tax 892 892

TOTAL SPENDING 180,487 2,394,101


Capital Investment

Presented by:

David JensenFiscal [email protected]


SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISCapital Investment

• General Obligation Bond Sales Usually Twice a Year

• Interest Rates at Mid 2.5%

• Capital Investment Debt Guidelines for Authorized Projects is 3.25% of Personal Income, minus Outstanding Bonds

• Current Debt Payment is 2.7% of MN Personal Income

• 6.9 Billion in Bonds are Held by Investors

• New Bond authorizations have usually been 775 million in Even Years and 225 Million in Odd Years

• Bonds are sold for cash flow needs, not individual projects

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISCapital Investment

• Retire 40% in 5 Years and 70% in 10 Years

• Projects Come Under Review in 4 Years for Possible Cancellation

• Proceeds Limited to “public owned land and buildings”

• Provides Financial Stimulus for State, Regional, and Local Economies

• There Are no More Bearer or Registered Bonds – Electronic Bidding and Documents

Appropriation and Revenue Bonds can be used for different purposes.

96


E-12 Education Finance

Presented by:

Jay WillmsFiscal [email protected]


97

General90.2%

Federal9.3%

Permanent School0.3%Gift

0.0%

Special0.2%

FY 2014-15 All Funds Budget ($ in millions)


Education FinanceSENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

98

General Education80.0%

Special Education13.9%

Ed Excellence3.0%

Facilities, Nutrition, Libraries1.4%

Education Programs1.1%

Agencies0.5%

FY 2014-15 General Fund Budget ($ in millions)


Education FinanceSENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

99

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISEducation Finance Aid Budget

Education Aid$ in millions

FY 2012 FY 2013 FY 2014 FY 2015

General Education 5,366.9 6,915.0 5,982.1 6,073.1

Other General Education 36.1 60.2 43.9 42.0

Education Excellence 147.6 225.0 230.3 230.2

Special Education 876.2 1,145.3 1,029.7 1,081.7

Facilities & Technology 35.8 50.0 46.7 51.9

Nutrition, Library, Other 35.3 40.0 37.4 38.0

Children & Family Support 54.2 65.1 59.4 59.8

Prevention 1.1 1.8 1.7 1.8

Self Sufficiency & Lifelong Learning42.6 54.5 47.1 48.0

MDE, Other Agencies 34.3 40.2 37.2 37.2

Total 6,630.1 8,597.1 7,515.5 7,663.7

100


General Education & Referendum Programs

Basic82.3%

Comp8.1%

Ref & TBRA *1.7%

OpCap *1.4%

T&E1.3%

Ex. Time1.2%

Alt Comp *1.0%

T.Spar1.0%

LEP0.7%

Sparsity0.4%

Equity *0.4%

Sm Schl0.3%

G&T0.2%

Transition *0.1%

* Indicates programs that also have a levy component

GenEd Aid = $6,031.5 million in FY 2014

101

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISEducation Finance Property Taxes

E-12 Property Taxes($ in millions)

FY 2012 FY 2013 FY 2014 FY 2015

General Fund 1,308.7 1,335.1 1,368.1 1,387.5

Community Service Fund 75.1 75.5 76.1 75.6

Debt Service Fund 804.3 810.8 834.3 848.6

OPEB/Pension Debt Svce 59.9 65.9 69.9 68.9

Total Schl Dist Levies 2,248.0 2,287.3 2,348.4 2,380.6

Credits & Adj (72.8) (15.1) (14.9) (14.3)

Total Certified Levies 2,175.2 2,272.2 2,333.5 2,366.3

102

MN Property Taxes By SourceSENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

Total = $8,186.0 million

Schools28%

Counties33%

Cities23%

Towns3%

State Gen Levy10%

Special Tax. District4%

Taxes Payable 2012 Final

103Data based on Based on Nov 12 forecast . Levies for FY 14 and later are projections.


FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 20170

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1,933,513

986,425 1,191,464 1,283,310

1,375,745 1,612,787 1,774,240

1,918,564 2,066,887

2,132,899

2,175,154

2,272,169

2,333,535

2,366,259 2,437,133

2,489,718

Total Education Property Tax Levies,FY 2002 - FY 2017(Dollars in 000s)

Property Tax Levy Trends

104

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISRevenue Trends

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 -

2,000

4,000

6,000

8,000

10,000

12,000

Education Spending by Type of RevenueFY 1998-2015 (projected)

(dollars in millions, based on EOS '12)

Prop Tax Oth Rev State Aid Federal Aid Credits & Oth Aid Total

Mill

ions

of d

olla

rs

Gov Ven-tura’s “Big

Plan”

ARRA Fed-eral Funds

105

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISOperating Referendum Trends

19861987

19881989

19901991

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20140.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

47.1%

89.2% 89.3%

Percent of Districts with Operating Referendum Authority FY 1986 - 2014

106


Wrap-up/Questions

Presented by:

Eric L. NaumanLead Fiscal [email protected]


107

OFFICE OF COUNSEL, RESEARCH, AND FISCAL ANALYSISWhere To Get Other Information

• This Briefinghttp://www.senate.mn/departments/scr/presentations/index.php#header

• Senate Budget Tracking Spreadsheetshttp://www.senate.mn/departments/fiscalpol/tracking/index.php?ls=#header

• November 2012 Forecasthttp://www.mmb.state.mn.us/fu-current-fore-nov

• 2012 Senate Counsel, Research and Fiscal Analysis Fiscal Reviewhttp://www.senate.mn/departments/scr/freview/2012/fiscal_review.pdf

• House Fiscal Staff Publication on Fiscal Noteshttp://www.house.leg.state.mn.us/fiscal/files/12fnotes.pdf

• Fiscal Note Searchhttp://www.beta.mmb.state.mn.us/fiscal-notes

http://www.senate.mn/departments/scr/presentations/index.php

http://www.senate.mn/departments/fiscalpol/tracking/index.php?ls=

http://www.mmb.state.mn.us/fu-current-fore-nov

http://www.senate.mn/departments/scr/freview/2012/fiscal_review.pdf

http://www.house.leg.state.mn.us/fiscal/files/12fnotes.pdf

http://www.beta.mmb.state.mn.us/fiscal-notes