1

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

Minnesota State Budget: A Brief Overview

February 13, 2014Presented by: Eric L. Nauman, Minnesota Senate Fiscal StaffMinnesota Senate, Office of Counsel, Research and Fiscal Analysis

2

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISRole of Legislative Fiscal Staff

• 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.

3

OFFICE OF COUNSEL, RESEARCH, AND FISCAL ANALYSISBudget Overview

Where Do General Fund Resources Come From -- FY 2014-15Total Revenues = $40.9 Billion

November Forecast, 2013

4

OFFICE OF COUNSEL, RESEARCH, AND FISCAL ANALYSISBudget Overview

Where Do General Fund Dollars Go -- FY 2014-15Total Spending = $39.1 Billion

November Forecast, 2013

FY 2013 FY 2014 FY 2015

July 1, 2013 July 1, 2014

Legislative session

Governor’s biennial budget submission

Legislative session

FY 2014-15 biennial budget enacted

Legislative session

November 2012

Forecast

February 2013

Forecast

November 2013

Forecast

February 2014

Forecast

February 2015

Forecast

November 2014

Forecast

Governor’s capital budget

submission

FY 2014-15 supplemental budget

actions enacted

OFFICE OF COUNSEL, RESEARCH, AND FISCAL ANALYSISThe Biennial Budget Calendar

5

6

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISBudget Forecasting

• 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)

7

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISGeneral Fund Budget Forecast

• 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.

8

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

General Fund Budget ForecastNovember 2013

FY 2014-15 Biennium FY 2016-17 Biennium$0

$10

$20

$30

$40$40.9

$44.8

$39.0$40.8

Projected General Fund Resources & SpendingResources Spending

Billions

9

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

General Fund Budget ForecastNovember 2013

FY 2014-15 Biennium FY 2016-17 Biennium-$4

-$2

$0

$2

$0.8

$2.3

1.5

Projected General Fund Balance

Budgetary BalanceStructural Balance

Billions

10

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSISBudgetary Balance Over Time

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-$6,000

-$4,000

-$2,000

$0

$2,000

(2,290)

(4,229)

(160) (466)

88

2,163

(935)

(4,570)

(3,425)

(5,028)

0

(627)

825

Prior Budgetary Balance LevelsBased on Feb Forecast For Session*

Legislative Sessions 2002-2014Dollars in Millions

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.

11

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

Capital Investment – The Process

• 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.

12

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

Capital Investment Request for Minneapolis Under Consideration

• 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.

13

SENATE COUNSEL, RESEARCH, AND FISCAL ANALYSIS

Wrap-up/Questions

Presented by:

Eric L. NaumanLead Fiscal AnalystEric.Nauman@senate.mn651-296-5539

14

OFFICE OF COUNSEL, RESEARCH, AND FISCAL ANALYSISWhere To Get Other Information

• This Briefinghttp://www.senate.mn/departments/scr/presentations/index.php#header

• Senate Budget Tracking Spreadsheetshttp://www.senate.mn/departments/fiscalpol/tracking/index.php?ls=#header

• November 2013 Forecasthttp://www.mmb.state.mn.us/nov-2013-forecast

• 2013 Senate Counsel, Research and Fiscal Analysis Fiscal Reviewhttp://www.senate.mn/departments/scr/freview/2013/fiscal_review.pdf