Minnesota State Budget Overview and Fiscal Analysis

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Explore the role of legislative fiscal staff in analyzing and tracking spending and revenue proposals for the Minnesota state budget. Discover where general fund resources come from and how they are allocated. Dive into the biennial budget calendar and forecasting process to understand the state's financial planning.

  • Minnesota
  • Budget
  • Fiscal Analysis
  • Legislative Staff
  • Forecasting
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  1. SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Minnesota State Budget: A Brief Overview February 13, 2014 Presented by: Eric L. Nauman, Minnesota Senate Fiscal Staff Minnesota Senate, Office of Counsel, Research and Fiscal Analysis 1

  2. Role of Legislative Fiscal Staff SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS 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. 2

  3. Budget Overview OFFICEOF COUNSEL, RESEARCH, AND FISCAL ANALYSIS Where Do General Fund Resources Come From -- FY 2014-15 Total Revenues = $40.9 Billion November Forecast, 2013 Sales Tax 26.2% Income Tax 49.8% Corporate Tax 6.9% Statewide Prop. Tax 4.3%Gross Earnings Taxes 2.0% Alcohol Taxes 0.4% All Other Revenues 3.7% Other Tax Revenues 3.6% Cig & Tobac Taxes 3.0% 3

  4. Budget Overview OFFICEOF COUNSEL, RESEARCH, AND FISCAL ANALYSIS Where Do General Fund Dollars Go -- FY 2014-15 Total Spending = $39.1 Billion November Forecast, 2013 Health & Human Svces 29.0% Higher Education 7.2% Prop Tax Aids & Credits 7.5% K-12 Education 42.6% Public Safety 5.0% Transportation 0.7% Environ, Energy & Natural Res. 0.6% Agriculture 0.2% Economic Development 1.0% State Gov't 2.5% Debt Service/Capital 3.7% 4

  5. The Biennial Budget Calendar OFFICEOF COUNSEL, RESEARCH, AND FISCAL ANALYSIS Governor s capital budget submission FY 2014-15 supplemental budget actions enacted FY 2014-15 biennial budget enacted Governor s biennial budget submission Legislative session Legislative session Legislative session FY 2013 FY 2014 FY 2015 July 1, 2013 July 1, 2014 November 2012 Forecast February 2013 Forecast November 2013 Forecast February 2014 Forecast November 2014 Forecast February 2015 Forecast 5

  6. Budget Forecasting SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Forecast completed by MMB twice per year Nov Fcst completed by end of first week in December; Feb Fcst complete by end of Feb. (Feb 28, 2014) Current Law Forecast Measures the cost of spending and revenues collected based on current law Allows reasonable assumptions of projected growth in national and state economies and affected populations. Revenues must be estimated for all sources. Time period forecasted MN makes biennial budgets Forecasts in first year of biennium measure current biennium and next biennium. (FY 2014-15 & FY 2016-17) Forecasts in second year of biennium measure current biennium, and next two biennia. (so, next year FY 2014-15, FY 2016-17, & FY 2018-19) 6

  7. General Fund Budget Forecast SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Current Biennium (FY 2014-15) $825.2 million positive balance after paying off budget reserves, cash flow, & shifts. FY 2016-17 $2.3 billion positive balance after carryforward. 7

  8. General Fund Budget Forecast November 2013 SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Projected General Fund Resources & Spending Resources Spending $44.8 $40.8 $40.9 $39.0 $40 B i l l i o n s $30 $20 $10 $0 FY 2014-15 Biennium FY 2016-17 Biennium 8

  9. General Fund Budget Forecast November 2013 SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Projected General Fund Balance $2.3 $2 1.5 B i l l i o n s $0.8 $0 -$2 Budgetary Balance Structural Balance -$4 FY 2014-15 Biennium FY 2016-17 Biennium 9

  10. Budgetary Balance Over Time SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Prior Budgetary Balance Levels Based on Feb Forecast For Session* Legislative Sessions 2002-2014 Dollars in Millions 2,163 $2,000 825 88 0 $0 (160) (466) (627) (935) -$2,000 (2,290) (3,425) -$4,000 (4,229) (4,570) (5,028) -$6,000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Legislative Session *Budget balance as projected by Feb forecast for subsequent biennium in odd numbered years and for current biennium in even numbered years.. 2014 Session data based on Nov 2013 forecast. 10

  11. Capital Investment The Process SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Capital Investment & State Bonding is one of the ways that the state pays for long-term public projects. (Must be paid back in 20 years or less.) Primary purpose of bonds is to acquire and better public land and buildings. -- Typically used for fixed assets such as land or buildings. -- Fixed asset must be long-lived, useful life should be at least ten years. -- Projects should be publically owned. Agencies and local goverments submit requests by July 15 of odd numbered years; Governor makes recommendation to legislature by January 15 of even numbered year. Governor has requested $986M of projected in 2014 session -- 28% statewide programs, 38% seven-county metro area, 34% greater MN -- 27% education, 24% economic development, 15% environment, 13% capitol restoration . Three-fifths vote required. (Minn Const., Art XI, sec. 5) -- 41 votes in Senate; 81 votes in House of Representatives. 11

  12. Capital Investment Request for Minneapolis Under Consideration SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Total requests for Minneapolis-based projects = $93.0M. Requests focus on asset preservation and improvement, land acquisition, building renovation. Many projects include Minneapolis Park and Rec Board projects. The largest single project is predesign/reconstruction for Nicollet Mall -- $25.0M; Franklin Ave bridge request for $11.7M. Governor s capital request includes $27.0M for Minneapolis; Includes $20.0M for Nicollet Mall and $7.0M for sculpture garden & Cowles conservatory renovation. Next step will be legislation from House and Senate, conference committee negotiation, and final agreement. 12

  13. SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS Wrap-up/Questions Presented by: Eric L. Nauman Lead Fiscal Analyst Eric.Nauman@senate.mn 651-296-5539 13

  14. Where To Get Other Information OFFICEOF COUNSEL, RESEARCH, AND FISCAL ANALYSIS http://www.senate.mn/departments/scr/presentations/index.php#header This Briefing http://www.senate.mn/departments/fiscalpol/tracking/index.php?ls=#header Senate Budget Tracking Spreadsheets http://www.mmb.state.mn.us/nov-2013-forecast November 2013 Forecast http://www.senate.mn/departments/scr/freview/2013/fiscal_review.pdf 2013 Senate Counsel, Research and Fiscal Analysis Fiscal Review 14

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