Where does the money go? An explanation of General Fund spending

Minnesota’s November forecast estimates that the state will spend $38.6 billion in the next biennium, which starts July 2011. So where does all the money go? As shown in Chart A, two budget areas alone—K-12 Education and Health and Human Services—account for 71.4% of the state’s money. When adding in three more budget areas—Property Tax Aids and Credits, Higher Education and Public Safety—92.6% of the state’s General Fund expenditures are accounted for. When adding in debt service to the budget areas mentioned above, $38.6 billion has been reduced to $1.7 billion to be shared by the five remaining budget areas.

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Local Government Aid (LGA) is part of the Property Tax Aids and Credits budget (Chart B). Over the next two years, the program is forecasted to be funded at $1.1 billion. This makes LGA 30.4% of the Property Tax Aids and Credits budget, but just 2.7% of the state’s total forecasted General Fund expenditures for the next biennium.

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Food for thought on reforming LGA

As the legislature discusses reforming government, delivery of local services, LGA and the state/local relationship generally, CGMC will be closely evaluating any reform proposals. The two key factors that CGMC and the legislature should look at when evaluating reform proposals in these areas are:

  • Does the reform proposal respond to the underlying policy issue that drove the creation of our current LGA system? Does the new proposal continue to address significant variations in tax base across the state so that citizens and businesses in communities with less property tax wealth are still able to receive quality services without crushing property tax increases?
  • If the reform proposal does raise property taxes and decrease local services, are these burdens shared equally amongst property taxpayers across the state or do they fall disproportionately on residents and business in greater Minnesota?

WI water regulations could force million-dollar upgrades on MN cities

The Coalition of Greater Minnesota Cities supports cleaning up polluted waters in Minnesota; however, cities’ limited financial resources must be spent wisely on those projects leading to the greatest environmental benefits. CGMC’s environmental committee monitors legislation and regulations pertaining to water quality and advocates for standards that are technologically feasible and based on current sound science.

Nutrient standards for Minnesota waters are currently a key area of concern. The Minnesota Pollution Control Agency (MPCA) is developing numeric nutrient standards for rivers and streams in Minnesota in accordance with the federal Clean Water Act. The primary pollutant being regulated is phosphorus, which contributes to problem algae growth.

Meanwhile, the Wisconsin Department of Natural Resources (WDNR) recently adopted a set of very strict nutrient standards for its surface waters, including Lake Pepin. Wisconsin’s standards are much stricter than the standards Minnesota is considering to adopt. CGMC’s research indicates that the Wisconsin 100 μg/L phosphorus standard applies year-round regardless of temperature, river flow conditions or actual impact on algal growth. The Minnesota standard will apply during the May to September growing season, when algae are most likely to be a problem, and will consider the actual impact on algal growth.

Approximately two-thirds of Minnesota’s land mass drains into Lake Pepin. Under federal law, if the discrepancy between the state standards is not resolved, Minnesota dischargers upstream of Lake Pepin, including but not limited to municipal waste water facilities all the way to Grand Rapids, may be required to comply with Wisconsin’s unduly stringent phosphorus reduction requirements. These facilities would have to spend millions of dollars to upgrade their facilities.

CGMC is currently investigating this issue and reaching out to other stakeholders in an effort to determine possible legislative and/or administrative remedies for this issue.

RSVP today! CGMC Legislative Action Day

Invitations are being delivered today to legislative offices for CGMC’s annual Legislative Action Day, which will be held Wednesday, February 9. Each year, mayors, city council members and city staff from greater Minnesota meet in St. Paul to discuss important policy issues for the session and visit with their local legislators at the Capitol. At night, you are invited to join our members in a more casual setting at Mancini’s Char House for dinner and mingling. A social hour will start at 5:30 p.m. with dinner being served at 6:30 p.m. If you are able to attend, please RSVP to Colleen Millard at cfmillard@flaherty-hood.com or 651-259-1914.