Earlier this morning, the legislature passed its budget deal, which includes no further cuts to LGA and MVC. The bill ratifies the governor’s unallotments to LGA/MVC, and the legislature’s cuts from earlier in the session are still applicable, but the base funding level for city aid programs going forward is not impacted by the final bill.

The budget deal was the result of several negotiation sessions with the governor over the weekend. Reaching an agreement hinged on a dispute over funding and program changes for Medicaid and GAMC. In the end, the governor and the legislative leaders struck a deal through which Governor Pawlenty or the next governor will be able to opt-in to a federal health care program by January 15. Because these negotiations prevented the legislature from voting on the budget deal by midnight, the governor called a special session for Monday to allow both chambers to vote on the bill, which passed in the House by a vote of 97-32 and in the Senate by a vote of 52-14. The governor is expected to sign the bill later today.

In addition to most of the governor’s unallotments being ratified, other features of the bill include an increase in the K-12 education shift from $1.7 billion to $1.9 billion, several accounting changes in the tax area, and no inclusion of over $400 million in anticipated federal funding. Although the state is not counting on this money to balance its budget, many believe that it will eventually be delivered, which will create a reserve fund for the state and likely prevent unallotments of city July and December aid payments.

Because the bill language became available very early this morning, CGMC staff is still reviewing it to see if there are any other impacts to cities (e.g., any language relating to levy limits). As these details become clearer, we will keep you updated via the CGMC website.