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  • Duluth business owners call for strengthening workforce with education investments

    by Laura Mortenson | May 13, 2016

    This is another story in a series that shares why small business owners believe it’s important to reinvest our budget surplus back into our state to build a broader, more durable prosperity for all Minnesotans.

    In 1997, Patty McNulty joined Duke Skorich as a partner in his company, Zenith Research Group, Inc. Today, the Duluth market research firm serves businesses in a variety of industries and cities across the country. They have employed close to 100 people over the past 19 years.

    Photo Duluth business ownersPatty and Duke believe that continued investment in communities and neighborhoods throughout the state is essential to the strength of the Minnesota business climate. Minnesota’s economy cannot be sustained if economic opportunity is available only in the Twin Cities metro area.

    “Small business is critical to the foundation of Minnesota’s economy,” Duke said. “Very often it is small businesses that allow cities, towns and villages to survive and prosper, while ensuring jobs for the people who live in those communities.”

    For Patty and Duke, one of the greatest advantages of owning a small business in Minnesota has been the quality of education. “From our local school districts to our colleges and university system, Minnesota values education,” Patty said. “Job applicants, even those without higher education, have solid reading skills, good communication ability and a broad background in a variety of subjects.”

    And Duke points out that Minnesota’s high-quality workforce is recognized by people and businesses in other states. “Educational investment is essential to building a strong economic future in the state,” he said. “The backbone of a strong business community are the workers, and Minnesota has always produced an educated workforce willing to be trained and equipped to produce.”

    Like many small business owners across the state, they are worried that some of the current proposals to use the state’s budget surplus for large, poorly targeted tax cuts would primarily benefit large businesses and would do little for small businesses. In addition, large tax cuts crowd out the continued and strategic investments that benefit small businesses and allow towns and cities throughout Minnesota to thrive.

    As Patty puts it, “Without the hundreds of small business owners and employees, Minnesota could easily lose what makes it the very distinctive place we love to call home.”

    Join with Patty and Duke and other like-minded small business owners to ensure the Legislature enacts budget policies that build a broader, durable prosperity in Minnesota. Sign the petition today.

    Then join in a discussion on why state investments matter to you via Facebook or Twitter using the hashtag, #MNProsperity.

  • Asset tests for health care: A solution in search of a problem

    by Ben Horowitz | May 10, 2016

    The Minnesota House Health and Human Services budget includes a proposal that would add a counterproductive, complex layer of bureaucracy between Minnesotans with low incomes and health care. If enacted, this provision would impose asset limits for some Minnesotans who get health care coverage through Medical Assistance (MA) and MinnesotaCare.

    This practice was abolished for most non-elderly Minnesotans and people without disabilities in 2014, and is one that deserves to be filed under “may sound simple, but is harmful and complicated in practice” for the following reasons:

    • It is unnecessary. People with low earnings but enough income from assets to maintain a higher-income lifestyle are already ineligible for MinnesotaCare and MA.When a person applies for health care coverage through MA or MinnesotaCare, their eligibility is determined based on a comprehensive measure of income called modified adjusted gross income (MAGI). MAGI doesn’t just include earnings like wages, tips and self-employment income; it also folds in a family’s other resources derived from assets, like capital gains, investment income and withdrawals from retirement accounts.
    • It is inefficient. Only a tiny portion of MinnesotaCare and MA enrollees have assets above the proposed limit, but the policy would complicate administration of these health insurance programs for everybody.In 2013, the state estimated that eliminating asset limits for most categories of Minnesotans eligible for MA would increase enrollment by just 1 percent. MA and MinnesotaCare serve more than a million people; re-instituting asset limits would make things more complicated for all of them. Other states’ experiences show that asset limits do not significantly change the number of people who access public supports, and they may even cost states money due to the burden of administering these inefficient rules.
    • It penalizes families who’ve saved for their future. The asset limits proposed by the House are $10,000 for a single individual and $20,000 for bigger households. Imagine the difficult decision that forces on someone who has saved for years to put a down payment on a house, or on soon-to-be-parents building up a financial cushion before they welcome their new family member. Families should not have to choose between a necessity like health insurance and saving for their futures.
    • It is especially harmful for farmers and small-business owners. Small businesses and farms require a lot of assets that may not always generate a lot of income. MinnesotaCare is an affordable health insurance option allowing entrepreneurs and independent farmers to weather recessions and depressed crop prices without sacrificing their health insurance or abandoning years of hard work and careful investments in their future.

    When a Minnesotan falls on tough times, they should have access to affordable, quality health insurance. A basic necessity like health care shouldn’t be held hostage just because a family has managed to build a modest nest egg. Policymakers should drop this harmful idea.

    -Ben Horowitz

  • House and Senate have very different priorities in their supplemental budgets

    by Clark Biegler | May 09, 2016

    With their conference committee about to begin, the House and Senate have put together their omnibus supplemental budget bills, which have different priorities for the current projected $900 million surplus. This doesn’t come as a surprise; when the two bodies released their budget targets earlier this session, the House allocated only $2 million of the surplus to areas outside of tax and transportation, and the Senate proposed $463 million in net general fund spending for non-tax and transportation budget areas. We’ve previously blogged about the various health and human services proposals. Today’s blog looks at proposals in E-12 education, higher education and economic development.

    The Senate supplemental budget proposes several investments in education. It includes $18 million in FY 2017 for school districts to establish voluntary pre-kindergarten programs, with priority given to areas with higher poverty rates and a lack of high quality pre-school options. The Senate also proposes $3 million in increased funding for the Minnesota Reading Corps. In addition, the Senate proposal sets aside funding to support development of teachers and proper placement of support staff to help improve students’ learning environments.

    In higher education, the Senate proposes $14 million for colleges and universities to narrow gaps in college education attainment between students of color and white students. The Senate also includes funding for the University of Minnesota to keep the price of tuition down and support for student programs at Minnesota State Colleges and Universities.

    In economic development, the Senate allocates $2.5 million to make housing more affordable, $85 million for broadband for Greater Minnesota; and $34 million for the Department of Employment and Economic Development for several community development initiatives and workforce training and development.

    The Senate also makes it clear that addressing equity issues is a key goal during this legislative session with a proposal that includes $91 million for FY 2017, two-thirds of which focuses on economic development and jobs.

    Working with such a small target, the House’s supplemental budget proposal primarily reallocates existing funding, with new investments in only a few areas.

    The House’s primary new investment is in economic development. It allocates $15 million in this biennium to increase broadband access for people in Greater Minnesota, and includes several workforce development grants which amount to $3.9 million.

    In education, the House’s limited new investments are made possible through savings resulting from a loan refinancing option for some school districts (which is also included in the Senate proposal). The House includes $5 million to improve school-based mental health services and $6 million in grants for some school districts to better serve students who have challenging behaviors or may be suffering from trauma. The House also proposes $1.5 million in increased funding for the Minnesota Reading Corps. The House education bill also changes the way equity funding can be allocated. In the past, this was only available to metro area schools, but the House proposes an additional $7.7 million in FY 2017 and stipulates this equity aid be available to non-metro schools as well.

    The supplemental budget conference committee will meet to negotiate on a supplemental budget bill that covers these major areas of the budget, as well as health and human services, public safety, environment, agriculture and state government.

    -Clark Biegler

  • Breaking down the three health and human services proposals

    by Ben Horowitz | May 02, 2016

    Last week, the Senate and House passed their plans for the Health and Human Services (HHS) portion of Minnesota’s budget, which funds critical services that make basic necessities like health care and child care affordable for more Minnesotans.

    The Senate HHS Budget Division has proposed a plan that would allocate $129 million in FY 2017 and $409 million in FY 2018-19, strengthening Minnesota’s supports for child care and health care aimed at financially struggling families and individuals. The Senate’s plan has many similarities to Governor Mark Dayton’s budget, though it contains many key differences outlined later in this post.

    In contrast, the House HHS Finance Committee’s proposal does very little, opting mainly for policy changes rather than significant investments. The House plan would increase HHS funding for some initiatives by $20 million in FY 2017 and $40 million in FY 2018-19; these spending increases are funded by an equivalent amount of cuts to MNsure.

    Two very different approaches towards supporting our state’s most vulnerable children

    The House plan for Minnesota’s child care affordability problem draws on feedback heard at community hearings held by the Select Committee on Affordable Child Care. It would form a task force and take other steps to begin streamlining licensing and regulation of child care providers. However, these policy changes don’t address the 7,200-family waiting list for Basic Sliding Fee Child Care Assistance, or the low provider rates in the broader Child Care Assistance Program (CCAP), which limit parental choice.

    By contrast, the Senate plan invests $8.1 million in FY 2017 and $40 million in FY 2018-19 to increase child care provider rates. An additional $15 million in FY 2017 and $38 million in FY 2018-19 would be invested in other services for children, including grants to increase access to affordable child care in Greater Minnesota, raising foster parents’ payment rates through Northstar, expanded mental health services in schools, support for homeless youth, and improved care for children with asthma covered through Medical Assistance.

    Dayton’s budget funds an increase to the monthly cash grant through the Minnesota Family Investment Program (MFIP). MFIP is intended to provide families experiencing dire financial struggles with the bare necessities; most of the people who benefit are children. However, the MFIP grant has been stuck at $532 for a family of three for 30 years, a failing that neither the House nor the Senate addresses.

    Senate builds on Minnesota’s health care successes; House would move in the wrong direction

    Health insurance is another area of sharp contrasts between the House and Senate. The Senate focuses on efforts to provide more Minnesotans with access to affordable, high-quality health insurance. Like Dayton’s budget, the Senate would seek a federal waiver to expand eligibility for MinnesotaCare to those earning between 200 and 275 percent of the federal poverty guidelines — or $24,000 to $33,000 for a single adult.

    The Senate waiver would also attempt to simplify health care enrollment for families with children, and allow people earning more than 275 percent of the federal poverty guideline to purchase MinnesotaCare coverage. The Senate joins the governor in spending $4.6 million in FY 2017 and $27 million in FY 2018-19 to protect the assets of spouses whose partner applies for home- or community-based services through Medical Assistance. The Senate bill also includes a policy aimed at making it easier for people to obtain prescription drugs.

    The governor and Senate include provider rate increases for mental health care, and for preventative medical and dental care. Both would also fund overtime pay for home health care workers. Federal policy changes have resulted in an overtime threshold for these workers of 40 hours; it was previously 48 hours in Minnesota. With funding for the new overtime pay, fewer Minnesotans with disabilities will have their care disrupted.

    The Senate HHS proposal funds a portion of Dayton’s proposed investments in direct care for people with mental illness, devoting $47 million in FY 2017 and $71 million in FY 2018-19, compared to the governor’s $89 million in FY 2017 and $165 million in FY 2018-19.

    Meanwhile, the House bill provides access to more expensive private health insurance plans for working families with low incomes by allowing them to opt out of MinnesotaCare when shopping on MNsure. The House would also place a $20,000 asset limit on married couples who access affordable health care through MinnesotaCare or Medical Assistance.

    Limited common ground

    Very few policy changes or new expenditures are found in all three proposals. One notable exception is a plan to enhance Minnesota’s mental health system by investing $8.4 million in FY 2018-19 in certified community behavioral health clinics, which would likely be supplemented by $15 million in new federal money. All three plans would also transfer and support some human services to tribal governments, though the Senate and governor allocate $1.5 million in FY 2017 and $3.8 million in FY 2018-19 more than the House.

    Many of the investments in the House plan are also found in the Senate’s proposal, though not Dayton’s. Beginning in 2014, people over 55 who enrolled in Medical Assistance had liens placed on their property; both the Senate and House spend about $2 million in FY 2017 and $5 million in FY 2018-19 to limit the services that result in lien placement. The Senate and the House would also both fund a mental health project in Southeast Minnesota, and increase resources for ambulance service providers and Safe Harbor for Sexually Exploited Youth.

    What’s next

    With every HHS plan now articulated, policymakers will soon begin negotiating a supplemental budget bill, which will combine the HHS budget proposals along with the proposals for education, public safety and other areas of the state budget.

    Policymakers should build on Minnesota’s strengths by investing in vital supports that enable Minnesotans to thrive.

    -Ben Horowitz

  • Senate equity proposal strives to create more economic opportunity

    by Clark Biegler | Apr 28, 2016

    Where are workers of color unemployed at over 2.5 times the rate of white workers? Where are households of color living in poverty more than three times the rate of white households? Where are the median full-time weekly earnings for women only 84 percent of men’s?


    This session, the Senate Subcommittee on Equity has put together a clear proposal to help tackle the disparities in economic opportunity that plague our state. Their proposal includes one-time funding totaling $91 million in FY 2017 to expand opportunity so that it is available to Minnesotans regardless of their race, gender, or where they live.

    Two-thirds of the bill is dedicated to employment and economic development, including:

    • $9.4 million in grants for the Latino, Somali, Southeast Asian, and American Indian communities to address educational, employment, and workforce disparities, and to support youth;
    • $8 million for a Minnesota Youth at Work grant program to connect at-risk youth with training opportunities, targeted toward youth of color and others who face barriers in the job market;
    • $5.1 million for Pathways to Prosperity, which provides job training and education for high-demand jobs; and
    • $1.5 million to promote high-wage, high-demand, nontraditional jobs for women.

    The Senate’s equity proposal also includes increased funding for Adult Basic Education, access to healthy foods through the newly established Good Food Access Program, as well as down-payment and closing cost assistance to help narrow the homeownership rate gap between white households and households of color.

    Governor Mark Dayton emphasized the equity conversation among policymakers in his State of the State address and by allocating $100 million in total for several equity proposals in his budget proposal. The Senate follows suit in striving to making economic opportunity available to more Minnesotans, and beginning to shrink the state’s economic disparities.

    -Clark Biegler

  • Creating a durable Prosperity: Why small business owners call for state investments

    by Laura Mortenson | Apr 18, 2016

    Holly Hatch-Surisook lives one mile from the successful restaurant she owns with her husband, Joe, in Northeast Minneapolis. Built from the ground up in 2008, Sen Yai Sen Lek Thai rice & noodles employs 25 dedicated workers who cook and serve delicious meals to satisfied customers day in and day out.

    Photo Holly and Joe, small business ownersFor Holly and Joe, their employees are more than workers. They are family. “Like many small businesses, we care very much about our employees beyond the labor they contribute to our company,” Holly said.

    That’s why she is following the budget discussions happening at the state Capitol this spring. Some at the Capitol are proposing large, poorly targeted tax cuts, saying that should be a top priority for policymakers this year.

    Holly disagrees.

    Instead, Holly believes it’s important to understand that small businesses like her’s rely on state investments to ensure employees have adequate opportunities for a better life. “Unfortunately, our small business doesn’t have the financial capacity — the financial scale — to offer the kinds of employee benefits that large organizations do.”

    That, she said, includes affordable child care, which could be expanded with additional state investments.

    Holly added that if investments in priorities like more affordable child care are not made using our budget surplus, her employees will have higher expenses. “That could mean one parent needs to stay home to care for his or her family,” she said. “If he or she stays home because they cannot afford child care, that affects their quality of life and it affects the staffing for my restaurant. Neither is a good option.”

    Holly thinks strategic investments are needed in our local communities — especially in resources that offer opportunities for more Minnesotans. Not only does Holly believe that state investment will improve her employees’ lives, it will also keep her business strong and growing.

    Join Holly and other like-minded small business owners to ensure the Legislature enacts budget policies that build a broader, durable prosperity in Minnesota. Sign the petition today.

    Then join in a discussion on why state investments matter to you via Facebook or Twitter using the hashtag, #MNProsperity.

  • An entrepreneur’s take on Minnesota’s budget debate

    by Laura Mortenson | Apr 16, 2016

    This is the second story in a series that shares why small business owners believe it’s important to reinvest our budget surplus back into our state to build a broader, more durable prosperity for all Minnesotans.

    Todd Mikkelson built his business, Sprayrack, around an invention he patented, which has become the standard in the water and air infiltration testing industry. Reliance on internet sales and the need to ship heavy products across the state’s crumbling infrastructure impact Todd’s business daily.

    Photo entrepreneur“In the past two years, shipping prices have gone up 10 percent. This is largely due to bad roads across the state,” Todd said. “Crumbling roads are costing car owners heavily in car repairs, and small business owners have to spend money on repairing their vehicles that they otherwise could have invested in their business.”

    In addition to crumbling roads, access to broadband is essential for Todd’s customers to make product purchases. “We do all of our sales over the internet, which is why most of our cost is in shipping,” Todd said. “But I would not have been able to start my business or maintain it in the way that I am currently able to without strong internet service.”

    Todd has benefited from his business’ proximity to the Twin Cities and the strong internet service that affords him. However, Todd believes reliable internet access should be commonly available regardless of geography.

    “Last year the Legislature failed to fund broadband for Greater Minnesota,” Todd said. “Why should people living outside of the Twin Cities be denied the same entrepreneurial opportunities that I have?”

    Todd, like many small business owners across the state, is worried that some of the current proposals to use the state’s budget surplus for large, poorly targeted tax cuts would primarily benefit large businesses and would do little for his small business.

    Instead, Todd and others are calling for policymakers to invest the surplus. “By strategically investing in the state’s infrastructure and broadband, the Legislature would build a broader and more durable prosperity in Minnesota,” Todd said. “Small business owners would save money on shipping costs and entrepreneurs across the state would be on a level playing field when it comes to reliable internet service.”

    Join with Todd and other like-minded small business owners to ensure the Legislature enacts budget policies that build a broader, durable prosperity in Minnesota. Sign the petition today.

    Then join in a discussion on why state investments matter to you via Facebook or Twitter using the hashtag, #MNProsperity.

  • House budget targets give some answers and leave questions

    by Clark Biegler | Apr 08, 2016

    Minnesota policymakers entered the 2016 Legislative Session with a projected $900 million surplus for the remainder of the current FY 2016-17 biennium and $1.2 billion for FY 2018-19, allowing them the chance to make important investments in a broader and more durable prosperity.

    However, the Minnesota House of Representatives released partial budget targets yesterday that indicate that only $2 million of the surplus will go toward areas of the budget besides transportation. A press release indicates that tax cuts and transportation spending will be the priority for the surplus, although the budget resolution does not specify budget targets for these two areas. The release also provides some details about specific funding priorities, but also demonstrates that those new investments will be funded by shifts and reductions in other areas.

    The targets are an important milestone in the budgeting process, as they set the size of the omnibus budget bills that the House finance committees will need to put together by April 21. These bills will describe proposed changes to the state’s two-year budget passed last year.

    House of Representatives General Fund Targets (Net)
    Jobs and Energy $12 million
    Environment and Natural Resources $3.9 million
    Capital Projects $0
    E-12 Education $0
    Health and Human Services $0
    Higher Education $0
    Public Safety -$1 million
    Agriculture -$1.9 million
    Debt Service -$3.1 million
    State Government -$9.5 million
    Other Bills $2 million
    Net Changes in Spending $2 million

    Among the budget areas receiving targets yesterday, the area getting the largest target is Jobs and Energy, with its $12 million net target to include investments in broadband in Greater Minnesota.

    The House indicates that the Agriculture, Public Safety and State Government committees will reach their targets primarily through carrying over or transferring money and finding efficiencies within their juridictions. The House proposes no net changes in Higher Education. And while E-12 Education and Health and Human Services each has a $0 target, the House indicates that there will be $50 million in additional spending in K-12 spending that is offset by changes elsewhere in the E-12 budget, and there will be “repurposing” of funds within Health and Human Services.

    Taxes and transportation did not receive targets yesterday. These are the two areas where little action was taken in 2015, and where the Legislature has reconvened conference committees whose starting point for negotiations are last year’s bills. Last year’s House tax bill contained $2 billion in tax cuts, and grew dramatically over time because it contained a number of phased-in tax cuts.

    The targets released today make it clear that the House holds a very different vision than Governor Mark Dayton, whose supplemental budget proposal released last month included sustainable tax reductions focused on working families, investments in broader economic opportunity, and funding boosts for services for some of the most vulnerable Minnesotans. The Senate is expected to release their targets later this month.

    -Clark Biegler

  • Voices for Racial Justice agenda maps out ways to make progress on racial equity

    by Ben Horowitz | Apr 05, 2016

    Policymakers from across the state have begun to pay more attention to Minnesota’s open secret: our economic success story often leaves out Minnesotans of color. Policymakers began an important dialogue between legislative sessions about ways we can reduce racial disparities. Voices for Racial Justice, a group that has been working to build a more equitable Minnesota for more than 20 years, recently released the 2016 version of their Racial Equity Agenda, a policy blueprint for a more equitable state.

    Minnesota’s persistent racial disparities got a fresh dose of attention after the most recent Census data highlighted a stunning decrease in the income of black Minnesotan families. A Legislative Working Group on Economic Disparities met in January to discuss ways to address racial opportunity gaps. More recently, in his supplemental budget, Governor Mark Dayton included a $33 million proposal to explicitly address racial disparities, with details to be filled in after community input. An additional $67 million in the governor’s supplemental budget is geared towards investments with a strong equity component. Examples of those investments include efforts that support workers and business owners of color, and homebuyer assistance aimed at reducing the racial homeownership gap.

    The Racial Equity Agenda, which has more than 60 supporting organizations, contains 33 policy suggestions for a more equitable Minnesota. These recommendations cover nearly every area of state government with implications for every corner of Minnesota, from our infrastructure for clean water to our voter registration laws. Among many other policy proposals, the agenda includes calls to:

    • Increase state investments in Basic Sliding Fee, a source of child care assistance that disproportionately serves families of color but has a waiting list of more than 6,500 families;
    • Provide access to public health insurance for undocumented immigrants, many of whom currently lack an affordable source of health care despite making vital contributions to our economy;
    • Make earned safe and sick time available at work for the 1.1 million Minnesotans who currently lack it, including 47 percent of African American and 60 percent of Hispanic workers;
    • Offer driver’s licenses to all, regardless of their immigration status, so that our roads are safer and so that workers are better able to find and get to jobs that fit their skills.

    The Racial Equity Agenda’s formal release took place in a grand old church across the street from the Capitol, with an audience that reflected one of Minnesota’s greatest strengths: our state’s increasing diversity. If Minnesota is to retain our nation-leading economy, we’ve got to build on that strength and ensure that ladders to the middle class are built in every kind of neighborhood. For those who are interested in creating that future — one where Census data will show a Minnesota whose communities are growing closer together instead of further apart — the Racial Equity Agenda should be required reading.

  • Small businesses call for strategic investments in a durable prosperity for Minnesota

    by Laura Mortenson | Mar 16, 2016

    A group of small-business owners kicked off the 2016 Legislative Session with a message for policymakers: Large tax cuts aren’t the answer for them. Instead they want public investments in the building blocks that provide Minnesota with a high-quality workforce, strong infrastructure, and shared prosperity for more hard-working Minnesotans.

    Saying large, poorly targeted tax cuts could put at risk a strong economic future for the state, members of Main Street Alliance and MetroIBA held a press conference the opening day of session. They called on legislators to make strategic investments in education, affordable child care and other supports for a solid workforce.

    Graphic Small business owners investing in durable prosperityIn contrast, the 2015 House tax bill, which will be up for consideration again in 2016, proposes $2 billion in tax cuts, according to the Minnesota Budget Project. Proposals such as estate tax cuts and repealing the state property tax are poorly targeted and crowd out needed investments. In addition, those tax cuts would be ineffective at spurring economic growth, and legislators only need to look at Kansas as an example. Kansas went all in with sweeping tax cuts in 2013 to spur economic growth. But the tax cuts haven’t delivered, and instead economic growth and income growth in Kansas have slowed.

    Holly Hatch-Surisook, co-owner of Sen Yai Sen Lek Thai noodle restaurant, pointed out that the small benefit she would get from a cut to the statewide business property tax she pays would not be enough to impact her business model. By combining her financial resources with others in the form of business property taxes, she said, Minnesota can ensure a more stable and resilient workforce.

    Jason Rathe, owner of Field Outdoor Spaces landscape company, emphasized that small businesses like his are part of the fabric of Minnesota’s communities: they live in the community and serve the community. These businesses rely on the investments the state can make to support a high-quality workforce, such as less expensive and more flexible child care.

    According to the other business representatives who spoke, broadband infrastructure, high-quality education and affordable health care are investments that would better support broadly shared prosperity throughout the state.

    The group is calling on small businesses owners across Minnesota to join them and sign a petition asking legislators to make strategic investments instead of making large, poorly targeted tax cuts.

  • Governor Dayton’s 2016 tax proposal focuses on everyday Minnesotans through Working Family Credit, Child & Dependent Care Credit

    by Nan Madden | Mar 15, 2016

    In the tax portion of his supplemental budget proposal released today, Governor Mark Dayton continues to prioritize sustainable tax choices that move Minnesota toward a tax system that is more equitable across income levels. It is especially focused on supporting the work efforts of middle-class Minnesotans and those working their way into the middle class through expansions of the Working Family Credit and the Child and Dependent Care Tax Credit.

    Too many Minnesota families struggle with tight family budgets that make it hard to pay for child care, education and skills training, reliable transportation and other things they need to succeed and get ahead in the workforce. And these lower-income households on average pay a larger share of their incomes in Minnesota taxes than those with the highest incomes.

    In the face of these challenges, the Working Family Credit encourages and supports work, makes Minnesota taxes fairer, helps working people across the state to better make ends meet, and gets children off to a stronger start in life. It reaches Minnesotans all across the state: 48 percent of households receiving the credit live in Greater Minnesota and 52 percent live in the 7-county metro area.

    Dayton’s 2016 budget proposal boosts the Working Family Credit by $39 million in FY 2017 by:

    • Increasing the amount Minnesotans can earn and still receive the credit. For example, the income limit for a married couple with two children would be increased to $55,000. An estimated 24,000 Minnesota families would become eligible for the credit as a result.
    • Increasing the size of the Working Family Credit that most currently eligible households can receive; more than 286,000 households would benefit by an average of $138.

    Expanding the Working Family Credit should be a top priority for tax policymakers this year. Momentum on the Working Family Credit has also been seen in the Senate, where on Monday Senator Ann Rest has introduced Senate File 2586. This bill is similar to the governor’s proposal, as it increases the size of Working Family Credit for most currently eligible families and increases the maximum income that families can earn and still qualify for the credit.

    Senate File 2586 goes a step further than the Dayton proposal by including essential improvements for Minnesota workers without dependent children, who today pay above-average shares of their incomes for Minnesota taxes. It provides a stronger increase in the Working Family Credit for these workers and allows independent workers ages 21 to 24 to qualify.

    In his budget, Dayton also proposes a $47 million expansion of the Child and Dependent Care Tax Credit in FY 2017. This credit is overdue for an update, as it hasn’t kept up with the rising costs of child care – one of the largest expenses that families with children may face. Dayton’s proposal would increase the maximum amount of credit families can qualify for, and increase the income to qualify up to $112,000 for families with one child and $124,000 for families with two children. The House 2015 tax bill includes a version of this proposal more targeted to moderate-income families, so policymakers should be able to reach agreement on some improvements to the Dependent Care Credit this year.

    The governor’s tax proposal also includes a package of initiatives to close tax loopholes used by a relatively small number of corporations, and thereby create a more level playing field for all business taxpayers. And it includes a set of federal conformity provisions, which update Minnesota’s tax code for changes in federal tax law and keeps things simpler for taxpayers.

    In his recent public statements, Dayton has emphasized that Minnesota has only fairly recently come back into fiscal balance, and reminds us that our past experience with large tax cuts were followed by years of large and painful deficits.

    His supplemental budget reflects an appropriate sense of caution. It doesn’t go too far on tax cutting: it makes $117 million in net tax reductions in FY 2016-17 and $154 million in FY 2018-19, and provides a one-time $47 million boost in FY 2017 in local aids to cities and counties. Because the tax cuts are reasonable in size, that allows the governor to make additional investments in broader economic opportunity elsewhere in the budget.

    It is a time for budgetary caution, but there is also urgency to expand the state’s economic prosperity to those it hasn’t yet reached. Dayton’s tax proposal finds the right balance between these two priorities.

    -Nan Madden

  • Governor Dayton’s 2016 supplemental budget focuses on expanding opportunity, narrowing disparities

    by Clark Biegler | Mar 15, 2016

    Governor Mark Dayton today released his supplemental budget, which focuses on making key investments to expand opportunity in Minnesota.

    The supplemental budget describes the governor’s proposed changes to the two-year state budget passed last year. He proposes $581 million in net additional general fund spending and $117 million in net tax cuts in FY 2016-17, leaving $202 million of the projected surplus unspent, or on the bottom line.

    Here’s our first look at his budget.

    Dayton’s budget includes several proposals focused on Minnesotans struggling to afford the basics. He proposes to improve Minnesota’s Child Care Assistance Program by conforming to new federal requirements and increasing reimbursement rates for providers, an important step to improve child care options for Minnesota families. He also proposes applying for a federal waiver to expand affordable health care through MinnesotaCare to include households with incomes up to 275 percent of the federal poverty line ($55,440 for a household of three). The supplemental budget also includes a long overdue increase to the cash grant for families in the Minnesota Family Investment Program (MFIP). This monthly grant was set at $532 for a family of three in 1986 and hasn’t been increased since. The governor’s proposed $100 per month increase will make an immediate difference in the lives of Minnesota’s lowest-income workers and their children.

    In education, the governor proposes expanded access to pre-kindergarten, concentrating funding in areas with higher poverty rates and a lack of high quality pre-school options. He also proposes to create grants for colleges and universities in order to narrow the racial gaps in college education attainment in Minnesota.

    In total, the governor’s budget includes $100 million in initiatives to target the state’s racial disparities in economic well-being, including down-payment and closing cost assistance, and homebuyer financial education for low- and moderate-income people with a specific emphasis on households of color. The governor also recommends $33 million for other not yet specified actions to “expand economic opportunities and eliminate disparities for Minnesotans of color throughout the state.” As these initiatives are being determined, it is important for policymakers to hear from the communities who are most affected by these disparities.

    Dayton also proposes transportation improvements in motor vehicle, pedestrian, and bicycle infrastructure funded by increases in the gas tax and registration fees and additional trunk highway bonds. In the 7-county Twin Cities metro area, he proposes transit improvements funded by a half-cent local sales tax.

    The governor’s tax proposal focuses on supporting the work efforts of everyday Minnesotans through expansions of the state’s Working Family Credit and the Child and Dependent Care Credit. We take a closer look at the tax proposal elsewhere on our blog.

    The governor leaves a significant portion of the projected surpluses for FY 2016-17 and FY 2018-19 on the bottom line. The state’s current positive budget situation is certainly good news, but as with every economic projection, it carries a certain amount of risk. Dayton’s budget provides an additional financial cushion in case Minnesota’s economy doesn’t perform as well as previously projected.

    Dayton’s proposed supplemental budget works to expand economic opportunity to more Minnesotans regardless of where they live, their income, or their race or ethnicity.

    -Clark Biegler

  • Fair and sustainable tax decisions are essential to build a future of shared prosperity

    by Nan Madden | Feb 26, 2016

    The $900 million state budget surplus projected in today’s state February Forecast in part reflects the fact that our state economy is improving, although less robustly than projected in November. It also underlines the fact that Minnesota is not shielded from the ups and downs of the national economy.

    There’s more to do to build a broader and more durable prosperity in Minnesota. A critical question for the legislative session ahead is whether policymakers will make sustainable tax and budget choices that prioritize the concerns of everyday Minnesotans, like being able to afford child care, a college education and other keys to family economic security; or whether instead they will pass large, poorly targeted tax cuts, even though that has not been a successful economic growth strategy.

    In this uneven economic recovery, too many Minnesota families struggle to make ends meet. Tight family budgets make it hard for Minnesotans working for modest wages to pay for child care, education and training to build their skills, reliable transportation, and other essentials to succeed in the workplace and get ahead. Not only that, but low- and modest-income Minnesota households on average pay a larger share of their incomes in Minnesota taxes than those with the highest incomes.

    Given these realities, tax policies that support these Minnesotans’ work efforts should be a priority this session.

    That should start with expanding the Minnesota Working Family Tax Credit, which encourages and supports work, makes Minnesota’s taxes fairer, helps working people all across the state meet their basic needs, and gets children off to a stronger start. More than 12 percent of Minnesota tax-filing households receive this tax credit; 48 percent of them live in Greater Minnesota and 52 percent in the 7-county metro area.

    Policymakers should strengthen the Working Family Tax Credit this year by:

    • Increasing the size of the Working Family Credit that Minnesota households can receive;
    • Making more households eligible by increasing the amount that Minnesotans can earn and still receive the credit; and
    • Ending arbitrary age limits so that younger, independent workers ages 21 to 24 can qualify for the credit.

    Such steps would build off of both Governor Mark Dayton’s 2015 supplemental budget, which proposed strengthening the credit, and bipartisan interest at the national level in providing an improved credit for workers without children. A boost in the Working Family Credit would be a sustainable, targeted investment with a meaningful impact on working people all across the state.

    Another priority for the session should be to enact policies that allow more Minnesota families to afford child care. The high cost of care can leave Minnesota workers on the sidelines. A targeted expansion of the Child and Dependent Care Tax Credit to better reflect today’s costs of child care, combined with increased funding for Basic Sliding Fee Child Care Assistance, would mean more Minnesota parents could succeed in the workforce while their children benefit from stable, reliable care that meets their needs.

    Minnesota won’t be able to pursue the path to broader and more durable prosperity if policymakers devote the surplus to expensive and poorly targeted tax cuts. We only need to look to other states, like Kansas, to see that large tax cuts don’t work as an economic development strategy.

    This year’s tax debate has started where it left off at the end of the 2015 session, but too many of the choices on the table go in the wrong direction. Last year’s House tax bill, for example, contains a number of “phased in” tax cuts that grow larger and larger over five or more years. The proposal to expand the Social Security exemption would have cost $641 million in FY 2018-19, and repealing the statewide property tax would have cost $1 billion. Putting those figures up against the $1.2 billion surplus projected for FY 2018-19 in today’s forecast illustrates the fiscal irresponsibility of phasing in large tax cuts over time.

    And along with proposed cuts to the estate tax, such proposals would ultimately provide the largest tax cuts to higher-income Minnesotans and highest-value business properties, reversing the state’s recent progress in making Minnesota taxes more equitable among people of different income levels.

    Other states have tried to bring economic growth through large tax cuts, and little of the benefit trickled down. Instead, policymakers should focus on how more Minnesotans across the state can be part of a durable economic prosperity.

    -Nan Madden

  • Most popular blogs of 2015 forecast issues of 2016

    by Laura Mortenson | Jan 15, 2016

    Looking over the 2015 blogs garnering the most reads over the last year provides a road map of sorts for the 2016 Legislative Session. Affordable health care, fair taxes, expanded opportunity for families – these issues will be part of the debate among policymakers as they consider what to do with the $1.2 billion budget surplus this spring, just as they were last year.

    Specifically, the most-read 2015 Minnesota Budget Bites blogs were:

    These blogs address the essential issue of what policy choices are needed to expand economic opportunity in Minnesota. As such, we’re not surprised they were popular in 2015, and will continue to be a primary focus of ours in the year ahead.

    – Laura Mortenson

  • Legislative session meant many opportunities missed, some taken

    by Clark Biegler | Jul 22, 2015

    With an almost $2 billion projected surplus to work with in setting the next two-year budget, policymakers had opportunities to make targeted new investments after more than a decade of flat or declining funding in many public services. However, there was also a threat that policymakers would pass large tax cuts that would crowd out such investments, and harm the state’s ability to sustainably fund our needs.

    We’ve taken a closer look at this session’s tax and budget decisions in our latest issue brief, Opportunities Missed and Taken in the 2015 Legislative Session. In particular, we measured how well the final budget meets the goals of increasing opportunity and economic well-being for all Minnesotans and ensuring a fair and sustainable tax system.

    With a divided government, policymakers offered very different views of how to best serve Minnesotans, and it took a special session before they reached agreement on all parts of the budget. The final budget agreement allocated 23 percent of the surplus for supplemental spending in the 2015 fiscal year, and 31 percent for additional spending in the FY 2016-17 budget cycle. That left $865 million unallocated, which will contribute to the resources available in the 2016 Legislative Session.

    Pie chart How the projected surplus was used

    In the final budget agreements, policymakers made some important progress toward shared economic prosperity, like increasing access to affordable child care and keeping down the cost of higher education.

    However, there were also serious lost opportunities, such as the failure to expand earned sick time to more Minnesota workers; to allow all Minnesotans to have the economic opportunities that come with a driver’s license regardless of their immigration status; or to expand tax credits for working families, such as the Child and Dependent Care Tax Credit and the Working Family Credit. And some Minnesota families will face higher costs for health care because of severe cuts to MinnesotaCare.

    Policymakers also did not pass a tax bill or fund significant new investments in transportation, despite much attention and debate on these issues. Importantly, the dangerously large tax cuts that were proposed are likely to be debated among policymakers again next year.

    The substantial amount of the surplus left unallocated, combined with recent positive news about state revenues, makes it highly likely that Minnesota will have another surplus when the 2016 Legislative Session starts next March. Key priorities should be continuing the state’s progress toward a sustainable and equitable tax system, opening windows of economic opportunity to more Minnesotans, and ensuring that Minnesotans who hit a rough patch have the support they need.

    For more on the 2015 Legislative Session, check out our brief.

    -Clark Biegler

  • Budget bills passed during special session avert shutdown

    by Ben Horowitz | Jun 15, 2015

    By the early hours of June 13, Minnesota’s House and Senate passed the budget bills responsible for education, jobs and energy, and environment and agriculture in a special session. This prevented a shutdown of those portions of state government when the state’s next two-year budget cycle begins on July 1. Legislators also passed a bonding bill authorizing infrastructure projects around the state and a Legacy bill allocating dedicated funds for the arts and environment.

    The education bill spells out $526 million in new general fund resources for FY 2016-17, including $346 million to increase funding for school districts on the general education formula by 2 percent in both FY 2016 and FY 2017. Though the education bill does not include the statewide universal pre-kindergarten initiative that was a priority for Governor Mark Dayton, it does devote $96 million to increase funding for initiatives focused on young children, including:

    • $48 million for early learning scholarships;
    • $3.5 million for the state’s early learning and child care rating system;
    • $31 million for School Readiness;
    • $2.8 million for Early Childhood Family Education; and
    • $10 million for Head Start.

    The bill also includes $5 million for the Northside Achievement Zone, St. Paul Promise Neighborhood and new education partnership pilots that help children succeed by coordinating support for families at school and in their communities.

    Along with the increased funding for Basic Sliding Fee Child Assistance in the health and human services budget, these important investments mean that more Minnesota children will thrive in stable, nurturing care, and fewer parents will need to pass up on jobs or opportunities to go back to school because they can’t afford child care.

    The jobs and energy omnibus budget bill increases general fund spending by $33 million. The final version includes an additional $2.5 million to support employment for persons with disabilities or mental illness, and $2.5 million for housing for people with serious mental illnesses.

    Combined, the omnibus bills for environment and agriculture result in a $26 million decrease in general fund spending. That includes a $64 million cut from the environmental portion and a $39 million increase in agricultural spending.

    Along with the bills already passed and signed by Dayton, these budget bills will leave $865 million unallocated from the state’s projected FY 2016-17 surplus.

    -Ben Horowitz

  • Health and Human Services budget combines some good investments with harmful changes

    by Ben Horowitz | May 21, 2015

    The Health and Human Services budget (Senate File 1458) provides more families with options for affordable child care, more resources to protect the young and care for the elderly, and better access to health care for people with disabilities and mental illnesses. Unfortunately, the final agreement also contains several disappointments like $65 million in cuts to MinnesotaCare and a potentially inefficient re-verification proposal. It also fails to include a proposal that would have better supported Minnesota’s most struggling families in the Minnesota Family Investment Program (MFIP).

    A $10 million increase in FY 2016-17 for Basic Sliding Fee Child Care Assistance will help about 350 more families afford child care in an average month, and takes an important step in addressing a waiting list that is more than 4,000 families long. With Basic Sliding Fee, parents can afford to go to school or work while their children thrive in consistent care environments and employers can more easily find reliable employees.

    At the same time, the Health and Human Services budget also reduces Basic Sliding Fee’s resources by $3 million in FY 2016. These are unspent funds from FY 2015 — however, these funds are held up due to procedural issues, not due to a lack of demand. The Department of Human Services testified that this $3 million would otherwise go towards serving more families.

    The E-12 education bill also includes $62 million for young children through Early Learning Scholarships and school readiness efforts. However, Governor Mark Dayton vetoed this bill because it does not include funding for some of his other education-related priorities. While all of these programs can work together for families with young children, Basic Sliding Fee is the only tool that serves kids from infancy through age 12 and covers the amount of hours and range of times parents need to work.

    The Health and Human Services investments targeted to children and the young total $78 million, and include:

    • $52 million for child protection reforms,
    • $7.9 million to increase resources for some of Minnesota’s most struggling families by changing the way child support payments are handled in MFIP, and
    • $2 million for the Homeless Youth Act and $3 million for Safe Harbor for Sexually Exploited Youth.

    The Health and Human Services budget also includes proposals to make health care more affordable for seniors and adults with disabilities. It provides $4.8 million to reduce Medical Assistance premiums for employed Minnesotans with disabilities. The agreement also contains $3.4 million to reduce the cost of Medical Assistance for working seniors and people with disabilities who also have high medical costs.

    Cuts to MinnesotaCare in the Health and Human Services budget will also make it harder for some Minnesotans to afford health care. The $65 million in reduced funding will raise premiums and triple out-of-pocket costs for working Minnesotans. MinnesotaCare offers affordable health insurance for households earning 133 to 200 percent of the federal poverty guideline ($15,654 to $23,540 for an individual). These cuts are unnecessary because both the general fund and the main funding source for MinnesotaCare have projected surpluses in the FY 2016-17 biennium. Because the changes result in higher costs that add up with each visit to the doctor, chronically ill Minnesotans will be hit the hardest.

    The Health and Human Services agreement contains an eligibility re-verification proposal that could create a procedural barrier for families eligible for health care. The House Health and Human Services omnibus bill (House File 1638) contained a similar version that would have hired a third-party vendor to re-verify the eligibility of participants in services for families. The Health and Human Services budget will instead have the Department of Human Services perform a similar task within slightly different parameters. We were glad the conference committee moved away from Illinois’ harmful approach. However, the state must be sure that its audit focuses on Minnesota’s ability to determine eligibility rather than creating a new layer of red tape that causes eligible families to lose their health care.

    The Health and Human Services conference committee did not include a proposal from the Senate and Dayton that would have raised the cash grant in MFIP for the first time in 29 years. Since 1986, a very low-income family of three participating in MFIP has received $532 per month. That amount does not cover a family’s basic needs. A strong body of research connects increased family resources to better outcomes for kids. Policymakers missed an opportunity to help thousands of Minnesota children take a step away from living in deep poverty.

    Other significant Health and Human Services expenditures include:

    • $138 million for higher payments to nursing homes,
    • $76 million for mental health and chemical dependency, including efforts to expand access, build new facilities, and provide innovative services, and
    • $3.3 million to increase access to dental services through higher payments to dental providers.

    The Health and Human Services budget contains praiseworthy investments in Minnesota’s children, seniors and people with disabilities or mental illnesses. However, real damage will be done by cuts to MinnesotaCare, and the state’s eligibility audit could install a new barrier to affordable health care. This “some steps forward, some steps back” approach was not necessary in a year with a nearly $2 billion surplus.

    -Ben Horowitz

  • Policymakers put budget together, but it’s not a done deal

    by Clark Biegler | May 20, 2015

    Legislators ended this session with a flurry of late-night conference committees and marathon floor sessions. “Global targets” were established just a few days before session ended, so legislators raced against the clock Monday night to pass budget bills for FY 2016-17. However, policymakers are expected to come back for a special session.

    That’s because Governor Mark Dayton has said he will veto the E-12 Education bill, as he believes it does not provide adequate funding for several of his priorities. As a result, a special session is needed to set the education budget before the new budget cycle starts on July 1.

    The House, Senate and governor were unable to come to an agreement on two major budget bills, tax and transportation, which resulted in no tax bill and a small, relatively status quo transportation bill. The status of these bills will not trigger a special session.

    FY 2016-17 General Fund Budget Priorities
    Budget Bill Governor House Senate Conference Agreement
    E-12 Education $695 million $158 million $365 million $400 million
    Higher Education $283 million $57 million $205 million $166 million
    Health and Human Services $341 million -$1.2 billion $340 million -$302 million
    Jobs and Economic Development $53 million -$11 million $66 million $30 million
    Environment and Agriculture $29 million $8.8 million -$9.4 million -$23 million
    State Government and Veterans $50 million -$67 million $40 million $11 million
    Transportation and Public Safety $30 million -$108 million $30 million $30 million
    Judiciary and Public Safety $149 million $82 million $117 million $111 million
    Tax Cuts and Aids to Local Governments $136 million $2.3 billion $461 million $0


    The final budget bills include some provisions to expand prosperity to more Minnesotans by making higher education more affordable and increasing access to affordable child care. However, there were also many lost opportunities. For example, policymakers failed to expand earned sick time to more Minnesota workers, to allow all Minnesotans to have the economic opportunities that come with a driver’s license regardless of their immigration status, or to expand the Child and Dependent Care Tax Credit or the Working Family Credit.

    The E-12 Education bill increases funding for schools through the basic student formula by 1.5 percent in FY 2016 and 2.0 percent in FY 2017, an increase of $87 and $118 per student each year. It also includes $31 million for early learning scholarships and $31 million for school readiness. As mentioned above, Dayton plans to veto this bill.

    In Higher Education, policymakers agreed to keep the cost of tuition down at the University of Minnesota and Minnesota State Colleges and Universities, but the funding is not enough to fully freeze tuition. The final bill also improves financial aid through the Minnesota State Grant program and reduces the waiting list for American Indian scholarships.

    In the Health and Human Services budget, policymakers cut general fund appropriations by $302 million, despite the state’s projected $1.9 billion surplus. The budget rejects the House proposal to eliminate MinnesotaCare, which provides health insurance for about 100,000 working Minnesotans, but it does raise health care costs for MinnesotaCare participants. Policymakers included $10 million for more families to have affordable child care through Basic Sliding Fee Child Care Assistance, which had a waiting list of 4,400 families as of March. The bill also includes a number of investments in mental health, nursing homes, and services for children and youth.

    An Economic Development and Housing budget bill passed minutes before the end of session largely includes only base funding for affordable housing and economic development. It does not include a harmful “local interference” measure proposed by the House, which would have prevented local governments from setting higher wage and job quality standards than state law.

    The governor, House and Senate had all proposed substantial new money for Transportation, but could not bridge their differences about how to pay for them – by increasing existing dedicated funding sources (such as the gas tax) or using current general resources. A Senate proposal to expand access to driver’s licenses for Minnesotans regardless of immigration status was not included. Having a driver’s license can open a door to greater economic opportunity for immigrants, which also has a positive ripple effect on the state’s economy and ensures the state’s roads are safer by requiring everyone to take a driving test before they’re behind the wheel.

    The lack of a Tax bill means that policymakers did not move forward the House’s proposal for more than $2 billion in tax cuts, several of which grew larger over time, such as eliminating the statewide property tax paid by businesses and cabins, fully exempting Social Security income and deeply cutting the estate tax. Several of the House tax proposals also would have reversed the state’s recent progress in making the tax system more equitable, so it’s a good thing they were not enacted into law. The flip side is that the state also did not move forward with more positive tax proposals focused on the needs of lower- and middle-income Minnesotans, such as expanding the Child and Dependent Care Tax Credit or the Working Family Credit. Policymakers linked the tax and transportation issues together in end-of-session negotiations, and these issues may well remain intertwined into the future.

    The Legacy budget bill, which is an important funding source for arts and cultural heritage and environmental organizations, was not passed as well. However, the governor has said he would like to address this in a special session.

    With a projected $1.9 billion surplus for FY 2016-17, policymakers had substantial opportunity to invest in more Minnesotans sharing in our state’s economic success. Policymakers made some progress in making education more affordable and increasing access to affordable child care. However, they also missed many opportunities to invest in Minnesotans, such as failing to expand access to driver’s licenses or the Child and Dependent Care Tax Credit or Working Family Credit.

    -Clark Biegler

  • Budget deal on MinnesotaCare triples out-of-pocket costs, raises premiums for working Minnesotans

    by Ben Horowitz | May 19, 2015

    The Health and Human Services budget passed by Minnesota’s Senate and House of Representatives will increase health care costs for the working Minnesotans covered by MinnesotaCare. The Health and Human Services budget (Senate File 1458) stops well short of the House’s attempt to repeal MinnesotaCare, but it raises out-of-pocket costs and premiums. Lawmakers made these changes to a time-tested, proven tool for affordable health care despite a projected surplus in the fund that pays for it.

    MinnesotaCare is a path to affordable health insurance for households earning 133 to 200 percent of the federal poverty guidelines, or $15,654 to $23,540 per year for an individual. It also covers certain Minnesotans earning less. Eligible individuals and families pay income-based sliding scale premiums. MinnesotaCare reaches people like entrepreneurs, farmers and others who would otherwise lack access to quality, affordable health insurance coverage through their work.

    The cuts to MinnesotaCare amount to $65 million in FY 2016-17 and $96 million in FY 2018-19. Coverage through MinnesotaCare will have higher premiums, and the maximum out-of-pocket costs will be three times as high. While some important details are left to be determined, the average impact would be around $370 per adult in 2016. That’s more than a week’s paycheck for many Minnesotans participating in MinnesotaCare. Individual experiences will vary based on a person’s income and use of medical care.

    The changes will be hardest on Minnesotans who are dealing with chronic illnesses. That’s because the higher out-of-pocket costs will add up each time Minnesotans use their health insurance coverage. For example, someone who needs to see the doctor regularly to treat diabetes or mental health issues will see their already-tight budgets stretched even further. Increased out-of-pocket costs could also discourage sick people from seeking care.

    Raising health care costs for working Minnesotans is unnecessary given the state’s current resources. MinnesotaCare is primarily funded by the Health Care Access Fund. This year’s February forecast projected that the fund will remain balanced through FY 2019. That’s in addition to the projected $1.9 billion surplus in the general fund.

    MinnesotaCare has provided affordable health insurance to working Minnesotans for two decades. The Health and Human Services budget undercuts this critical gateway to affordable health care for people who can ill afford it.

    -Ben Horowitz

  • What’s at stake in final budget negotiations: Three different approaches to Minnesota’s future

    by Clark Biegler | May 13, 2015

    As policymakers work to set the budget for the upcoming FY 2016-17 biennium, they bring very different visions to the table.

    Governor Mark Dayton proposes to use much of the state’s projected $1.9 billion surplus for expanded educational opportunities, improving transportation, reducing the cost of college and other investments that expand economic success in Minnesota. The Senate proposes investments in education and health and human services, and a tax bill that focuses on reversing accounting shifts and boosting funding for local governments. The House’s tax bill includes large tax cuts and is even bigger than the surplus, and as a result, the House has the smallest targets for their budget bills. While they provide new spending in areas such as nursing homes, the House also makes dramatic cuts in affordable health care.

    Soon, “global targets” will be set that determine the size of the final tax and budget bills. Here’s a recap of where things stand.

    FY 2016-17 General Fund Budget Priorities
    Governor Senate House
    E-12 Education $695 million $365 million $158 million
    Health and Human Services $341 million $340 million -$1.2 billion
    Higher Education $283 million $205 million $57 million
    Transportation and Public Safety $179 million $144 million -$26 million
    Environment, Agriculture and Economic Development $84 million $57 million -$2.2 million
    State Department and Veterans $64 million $40 million -$67 million
    Budget Reserve $0 $250 million $150 million
    Tax Cuts and Aids to Local Governments $138 million $458 million $2.3 billion


    Dayton proposes to invest in schools, affordable college tuition, a safe and modern transportation system and other building blocks of a prosperous state. He largely focuses on Minnesota’s students by expanding free pre-kindergarten, freezing tuition at the University of Minnesota and Minnesota State Colleges and Universities (MnSCU), and improving financial aid. More Minnesota families would also have affordable child care through Basic Sliding Fee Child Care Assistance. Dayton’s tax proposal continues to prioritize a sustainable tax system and meeting the needs of Minnesota families, and would expand the Child and Dependent Care Tax Credit and Working Family Credit. Dayton also proposes a broad plan to repair and improve the state’s transportation system, which includes several investments in transit in both the Twin Cities and Greater Minnesota. This plan is paid for through a package of revenue-raisers, including the gas tax and local sales taxes.

    The Senate prioritizes investments in education and health and human services, and building the budget reserve. The Senate’s budget bills include many of the governor’s priorities to expand economic opportunity, including tuition relief at public colleges and universities, and reducing the waiting list for Basic Sliding Fee. The Senate proposes a larger tax bill than the governor, but at $458 million, their tax bill is only one-fifth the size of the House’s. The Senate tax bill puts a priority on reversing payment timing shifts and increasing funding to cities, counties and townships, as well as a tax credit for employers who hire veterans, an expansion of the K-12 Education Credit and a college savings tax credit. The Senate transportation bill includes similar priorities and funding mechanisms as the governor’s budget. The Senate also devotes $250 million to the state’s budget reserve.

    The House takes a very different approach. The House’s tax bill includes large tax cuts that grow over time and includes provisions that would reverse the state’s recent progress towards a fairer tax system. Because the tax bill is larger than the state’s projected surplus, it is paid for in part by cuts in health care, affordable housing and other critical services. The House targets for other budget bills are significantly smaller than the Senate’s. Their health and human services bill in particular raises concerns. While it includes increases in a few areas, such as nursing homes, the bill also eliminates MinnesotaCare and dramatically increases health care costs for more than 100,000 working Minnesotans. The House transportation bill is smaller than the governor’s and Senate proposals, and relies on dedicating existing funding sources that currently go the general fund. This puts transportation funding in greater competition with funding for schools, health care, public safety and other areas of the budget. The House also devotes $150 million to the state’s budget reserve.

    There is still work to do so that all Minnesotans have the chance to share in the state’s prosperity. As policymakers create the next two-year budget, they should prioritize policies that meet that goal, such as funding Basic Sliding Fee Child Care Assistance, maintaining affordable health care through MinnesotaCare and increasing access to education and training opportunities that build Minnesota’s workforce. Policymakers should also keep in mind the role that transportation plays in access to jobs and economic opportunity, and make funding and investment choices that meet the transportation needs of low-income persons and economically struggling communities. Policymakers should keep tax cuts limited and sustainable, and continue to make progress on a tax system that is more equitable through expanding the Working Family Credit and Child and Dependent Care Credit.

    -Clark Biegler