State of the State: Minnesota in 2011

This is the fifth of a ten-part series on the 2011 State of the State (SOTS) speeches in states with the ten worst projected relative budget deficits for FY 2012. Budget data is from the Center on Budget and Policy Priorities’ (CBPP) recent budget report, and SOTS speech text is from Stateline. CBPP’s data on states’ FY 2012 budget deficits as a percentage of their FY 2011 budget is the benchmark for relative budget deficits.

According to CBPP, in FY 2012 Minnesota is projected to have the seventh worst relative budget deficit, nearly 23.6% of its FY 2011 budget; and the seventh highest absolute budget deficit, totaling 3.8 billion dollars.

On February 9, 2011 Minnesota Governor Mark Dayton delivered his 2011 SOTS speech (full text available here). Gov. Dayton begins by imploring legislators to work together to avoid a government shutdown by the end of the legislative session in July. Next, he acknowledges the states’ current economic condition by citing falling real median income data and persistent unemployment rates affecting many Minnesota residents. Below are some noteworthy policies proposals discussed in the speech:

  • Spending Cuts: Gov. Dayton does not identify any spending cuts in his SOTS address. He pledges to increase state funding for public K-12 education each year he is in office as Governor “with no excuses and no exceptions.” He notes this money will not be spent to “maintain the status quo,” but by-and-large fails to specify how money will be spent, besides early childhood education. He pledges to re-establish the Governor’s Council on Early Childhood Education and “despite (Minnesota’s) deficit… increase funding to expand the number of children who can receive all-day kindergarten.”
  • Tax Increases: Without going into specifics, Gov. Dayton foreshadows his tax increase proposal and asks the recipients of said-tax increases for “two years to turn this Ship of State around.”
  • Economic Development: Gov. Dayton cites his use of special tax zones during his time as Commissioner of Economic Development, and pledges to revitalize a number of similar economic development agency initiatives. Later he explains that transportation infrastructure is like the arteries of the state economy, and is facing a critical juncture. However he does not provide specific policy solutions beyond recognizing the state’s “failed legacy of twenty years of declining investments.” Gov. Dayton explains his desire to discuss the best method of financing, asks the legislature to consider creating a Transportation Finance Authority and calls to tap “expertise in both the private and public sectors…” That being said, towards the end of the address he advocates for the passage of a statewide bonding bill, which indicates his administration may prefer public sector financing.
  • Government Reform: He notes the need to improve public service delivery while lowering costs, and references the state’s past partnership with General Mills through its Enterprise LEAN program. Additionally, he mentions pooling public sector equipment purchases to reduce expenses and examining every area of expenditure to explore contracting out services. Gov. Dayton boasts about one of his recently signed executive orders, which is expected to “expedite the state’s permitting and approval processes for new and expanding businesses.”

Policymakers in the North Star State face a daunting task in the years ahead and should look to other states for ways to navigate through this fiscal crisis and balance the budget. For example, the American Legislative Exchange Council (ALEC) recently published the State Budget Reform Toolkit, which contains many proven and innovative policy tools. Reason Foundation’s Annual Privatization Report 2010: State Government Privatization section identifies privatization policy trends, successes and failures from across the country.

For the previous articles in this SOTS series, see: Wisconsin, California, Illinois, Connecticut and Oregon.