02-13-2002 Council Agenda - Laserfiche WebLink

Home Browse Search

Feb 00 Z002 17:02:10 Via Fax —> 6514844530 Administrator Page 001 Of 003 LivIC - FridayFax mo,Pi of ;Vin•Ma /a 1 iliry. City; p;•bnlivn ov en nnv J A weekly legislative update from the League of Minnesota Cities Week 2: House and Senate budget balancing proposals on the table This week, the House and Senate each released their budget - balancing plans that would address the state's short -term budget shortfall. One highlight for cities: neither plan includes cuts in city LGA or homestead credit reimbursement, which is in stark contrast to the deep cuts proposed by the Governor in his supplemental budget released in early January. Although the House and Senate appear to be kindler and gentler to cities, the governor has chastised the House and Senate for not acting responsibly on the deficit. Undoubtedly, this tripartisan rancor could change the situation dramatically. The governor has even again suggested that he might wield his unallotment power if the House and Senate cannot craft a "more responsible" proposal. The Senate plan generally makes smaller cuts in state agency budgets; borrows monies from other state funds and replaces some current capital project cash funding with state issued bond proceeds. The House, on the other hand, makes deeper cuts in state agencies, including a hiring freeze that will save an estimated $100 million in the current biennium and makes more aggressive use of tobacco endowment funds. The Governor's plan is currently the only one that calls for tax increases in the form of expansion of the sales tax to some services, a new gas tax, and increased cigarette taxes. However, that could change as the House and Senate consider whether and how to tackle the 2004 -05 projected shortfall. Although the House and Senate plans do not make immediate cuts in state aids, the cuts in state agency budgets could trickle down to cities in the form of February 8, 2002 smaller grant programs, higher fees and a transfer of service responsibility. The House Plan -No cuts to LGA or homestead credit. - Eliminates the TIF grant appropriation for 2002 -2003 biennium. -Uses $811 million of state budget reserves. -Cuts $653 million from state spending. - Uses $554 million from the tobacco prevention endowment. -Saves $100 million by limiting new hires in state agencies. -Cuts $50 million more from state agencies and spending (cuts to be determined as bills move through the committee process). The Senate Plan -No cuts to LGA or homestead credit. - Eliminates all funding for TIF grant program, including the 2004 -05 biennium. -Cuts $200 million in state programs. -Uses $1.5 billion from different reserve accounts. - Refinances transportation projects and does accounting shifts. - Eliminates inflationary increase in FY 2004 -05 (saving $1.1 billion) -Cuts $400 million in spending in FY 2004 -05. -Will be supplemented with additional changes to address any remaining shortfall for 2004 -05 after the economic forecast is released at the end of the February. In Common House and Senate -Both cut $15 million from K -12 in 2002 -03, and $50 million from higher education. -Both use tobacco funds, the House spending the dollars, and Senate borrowing the funds and promises to restore the money in the future. - Neither plan funds inflation which is the largest difference between the Legislature and Ventura. For more Information on city legislative issues, contact any member of the League of M innesola Cities Intergovernmental Relations team. 651.281.1200 or 800.925.1122