11-16-2000 Agenda - Laserfiche WebLink

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FINANCIAL CONTEXT - STATE OF MINNESOTA For the 2002-03 biennium, state spending from all funds is projected to be $39.3 billion. • Spending from the General Fund is expected to be $26.2 billion, based on current planning estimates. (These numbers will be updated in a forecast available the end of this month.) Four programs are projected to account for 77% of General Fund spending: • $8.6 billion for K-12 Education (33%) • $4.5 billion for Health Care (17%) • $3.5 billion for Property Tax Aids and Credits (13%) • $2.8 billion for Higher Education (11%) The Governor's interest in limiting the rate of growth in state expenditures to that of inflation suggests careful planning for these spending areas that comprise more than two-thirds of the state budget. That goal cannot be attained unless it is applied to these "budget drivers" as well. In fact, three of these areas ( K-12 education, health care, and property tax aids and credits) have grown at a rate that far exceeds the rate of inflation. From the last biennium to the current biennium, all three of these areas grew by about 20% or more. From the current biennium to the next, based on current law, these areas are again projected to grow at a rate that far exceeds the expected rate of inflation with health care topping the list at a rate of growth of almost 26%. Current planning estimates indicate that covering the costs of existing programs and addressing inflationary pressures results in spending increases that exceed the rate of inflation and may leave high priority programs inadequately addressed. Examining the • effectiveness and priority of current state programs in an effort to appropriately reallocate funds from lower to higher priorities will be a critical element in the development of the budget. Clearly, taxpayers fund not only state programs, but local public expenditures as well. They are largely indifferent to the complex relationships between government jurisdictions, but do care about how much of their income is needed to support government spending. It's estimated that in 2002 about 17.2 cents out of every household dollar will be needed to support state and local government expenditures. The Ventura Administration will closely monitor this "price of government" indicator to ensure that we are not solving state budget pressures by simply shifting costs to local government, and that there is appropriate consideration of how government spending should be affected by changing economic conditions at all levels of government. According to State Auditor and DOR, local government revenue sources vary significantly. Local Property State General State Categorical Other Local Local Government Tax Aid Aid Revenue Sources Counties (99) 37% 6% 23% 33% Cities >2500 (00) 29% 21% 5% 45% Cities <2500 (00) 31% 33% 3% 32% School Districts (DOR) 25% 54% 12% 9% Contact: Patti Marquardt, MN Department of Finance—651-297-3616 patricia.marquardt@state.mn.us 10-Nov-00