1 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Minnesota State Budget: A Brief Overview February 13, 2014 Presented by: Eric L. Nauman, Minnesota Senate Fiscal Staff Minnesota Senate, Office of Counsel, Research and Fiscal Analysis

S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Role 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. 2

O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budget Overview 3

O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budget Overview 4

FY 2013FY 2014FY 2015 July 1, 2013July 1, 2014 Legislative session Governor’s biennial budget submission Legislative session FY 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 supplemental budget actions enacted O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS The Biennial Budget Calendar 5

6 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budget 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 & FY ) — Forecasts in second year of biennium measure current biennium, and next two biennia. (so, next year FY , FY , & FY )

7 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS General Fund Budget Forecast Current Biennium (FY ) — $825.2 million positive balance after paying off budget reserves, cash flow, & shifts. FY — $2.3 billion positive balance after carryforward.

8 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS General Fund Budget Forecast November 2013

9 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS General Fund Budget Forecast November 2013

10 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Budgetary Balance Over Time

11 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS 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) votes in Senate; 81 votes in House of Representatives.

12 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS 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 S ENATE C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Wrap-up/Questions Presented by: Eric L. Nauman Lead Fiscal Analyst

14 O FFICE OF C OUNSEL, R ESEARCH, AND F ISCAL A NALYSIS Where To Get Other Information This Briefing Senate Budget Tracking Spreadsheets November 2013 Forecast Senate Counsel, Research and Fiscal Analysis Fiscal Review