2. THE PROBLEM Spending continues to grow unabated.

3. THE PROBLEM State spending as a portion of the state’s economy is projected to reach a record high of 11.2% in 2014. Minnesota would be spending $6.8 billion less in the current budget if spending as a percent of GDP were at the 9.9% average.

4. THE PROBLEM The budget still faces long-term challenges. Aging population. Health care costs. Pension liabilities. Uncertainty over federal funding.

5. THE PROBLEM New spending requires substantial tax increases $1.5 billion in new spending

6. THE PROBLEM Competitiveness will suffer if we do not control spending. $1.5 billion in new spending

7. THE PROBLEM Globalization makes maintaining these high tax rates increasingly difficult. Globalization makes maintaining these high tax rates increasingly difficult.

8. HOW DID WE GET HERE? HOW DID WE GET HERE? The baseline budget process fails to evaluate performance and value. The baseline budget process fails to evaluate performance and value.

9. HOW DID WE GET HERE? HOW DID WE GET HERE? The baseline budget grows on autopilot.

10. HOW DID WE GET HERE? HOW DID WE GET HERE? There is no strong institutional barrier to spending growth. There is no strong institutional barrier to spending growth.

11. HOW DID WE GET HERE? HOW DID WE GET HERE? State agencies lead the process. State agencies lead the process.

12. HOW DID WE GET HERE? Past efforts at performance budgeting have failed.

13. Specific Recommendations THE SOLUTION Replace the baseline budget process with budgeting for outcomes.

14. Specific Recommendations THE SOLUTION Create a Legislative Budget Office to manage and prepare the information necessary to create budgets.

15. Specific Recommendations THE SOLUTION Charge the Legislative Commission on Planning and Fiscal Policy (LCPFP) with taking a stronger leadership role in creating the state budget.

16. Specific Recommendations THE SOLUTION Revive the Sunset Commission.

17. Specific Recommendations THE SOLUTION Require public value impact statements.

18. Specific Recommendations THE SOLUTION Impose spending limits through statute or constitutional amendment.

19. HOW THESE RECOMMENDATIONS CAN IMPROVE MEDICAID Start by setting the price of government and agreeing to fit Medicaid spending within that overall price.

20. HOW THESE RECOMMENDATIONS CAN IMPROVE MEDICAID Stop autopilot growth in the Medicaid budget.

21. HOW THESE RECOMMENDATIONS CAN IMPROVE MEDICAID Require Medicaid programs to accomplish specific outcomes and demonstrate progress.

22. HOW THESE RECOMMENDATIONS CAN IMPROVE MEDICAID Prioritize Medicaid spending based on the effectiveness of proposed programs.

23. HOW THESE RECOMMENDATIONS CAN IMPROVE MEDICAID Gain control of the data necessary to measure Medicaid program performance.

24. HOW THESE RECOMMENDATIONS CAN IMPROVE MEDICAID Work to gain greater freedom to prioritize and reallocate resources within Medicaid.