State Budget Deal

The state ended the shutdown last week with an agreement between the House/Senate Republicans and Governor Dayton. I, like many of you, found the shutdown frustrating. However, I appreciate Governor Dayton’s leadership and know he will be an important voice as we face future challenges.

The legislature passed 12 bills in special session ranging from K-12 Education to bonding. The deal struck cuts state government by $2.3 billion and borrows $1.38 billion to help balance the budget for the biennium. The state will borrow an additional $740 million from schools based on the bill that became law and will sell $640 million in tobacco bonds in anticipation of future revenue.

The legislature did try to mitigate some of the pain that borrowing money will cause school districts by increasing the per pupil formula $50 for the biennium, but this still leaves a significant shortfall for schools. While the school shift temporarily fixes the state’s structural deficit, it shifts the problem onto schools that may have to borrow money to make up for the loss in aid. Keep in mind that those schools will have to pay interest on the money they borrow.

The tobacco bonds work in a similar fashion because they borrow money from future budgets. The state would gain $640 million in the short term by selling tobacco bonds. However, over the life of the bonds it is estimated they will cost roughly $1 billion. While this does help address the immediate budget, it leaves our kids footing the bill.

Finally, as part of the shutdown-ending deal, a $500 million bonding package was agreed to, which contains $50 million for flood mitigation projects as prioritized by the commissioner. Some of the flood mitigation projects include the cities of Crookston, Climax, Oslo, Roseau, Brandt-Angus, and the Middle-Snake-Tamarac Rivers Watershed District.

While I do not support borrowing from schools and using future revenue, I am relieved people are back to work and Minnesotans can enjoy the state parks again. It is my hope that in the future we can address the structural deficit without using temporary shifts and borrowing to generate a more stable state budget.

Senator LeRoy Stumpf
LeRoy Stumpf represents District 1, which includes all or portions of Kittson, Marshall, Pennington, Polk, Red Lake and Roseau counties in the northwestern part of the state. He is the chair of the Capital Investment Committee.

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