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Hi;~~i l i~~i t • Redirects several dedicated revenue sources into the general fund including the motor vehicle title transfer fee, 2 cents per pack of cigarette tax currently dedicated to the future resources fund, lottery-in lieu receipts and unclaimed lottery receipts. Dedicates 9 cents per pack of the general fund cigarette tax to replace money for medical research and the academic heath center from the tobacco funds. • Limits fee increases to those directed at recovering program costs and where there was a compelling rationale to make programs self-supporting. • Requires action on unfinished ftems from FY 2003 that total $186 million. Recommendations include refinancing $110 million general-funded transportation projects and $76 million in one- time transfers from special revenue funds. Spending For the 2004-05 biennium, General Fund spending will total $28.120 billion. This is an increase of $1.012 billion over the current biennium, or 3.8 percent. Compared to the November 2002 forecast projections for FY 2004-05 spending, the proposed budget represents a reduction of $2.855 billion, or 9.2 percent of forecast spending. • Shields K-12 classrooms from budget cuts by increasing K-12 revenues per student from $7,633 in FY2003 to $7,799 in FY 2004, a 2.2 percent increase -and by providing an additional 1.3 percent increase in FY2005. The E-12 education budget will total $12.6 billion, an increase of 17 percent over the current biennium in order to meet commitments for the state to pay a greater share of school costs resulting from education finance and property tax reform. • Reduces forecast growth in Human Services spending from over 20 percent to just under 8 percent. Provides for general fund spending of nearly $7.0 billion, with recommended budget changes to address the cost pressures that have made this the fastest growing area of state spending.. • Moves dollars from higher education institutions to students. Provides nearly $2.6 billion in state funding, a 9 percent reduction from current levels. Reductions to the post-secondary systems are mitigated by increases to financial aid programs and limits on tuition increases. • Redefines local aid programs and formulae focusing local aid programs on assisting Minnesota communities with basic services. Slightly over $2.6 billion is provided, but this represents about a 22 percent reduction from the current biennium. The Governor recommends both levy limits and reverse referendum as tools to hold property taxes in check as funding reforms are put into place. • Reduces spending in other areas by an average 15 percent -state agency operating costs are reduced, as are lower priority grants programs. Reduces the number of state positions, state contracts and purchases. • Begins re-engineering the way that state government operates to more effectively deliver services in a less costly manner. Consolidates a number of smaller agencies, reduces duplication and overlap, eliminates low priority activities, while making others self-supporting. • Freezes public sector wages to restrain the growth in state, local and school district costs. Recommends atwo-year public employee pay freeze to minimize job losses and service disruptions. Governor's 2004-05 Budget