Birthing the all-cuts budget

Republican leaders in the State Legislature held a “birthday party” for Governor Dayton’s budget proposal, which was unveiled one month ago today.  It was a full-fledged extravaganza with cupcakes and candles and gift-wrapped talking points aplenty.

Of course, their GOP’s own budget proposal for the biennium is still in the womb with an unknown due date.  But one thing is clear:  they don’t think taxes should be raised at all to close the state’s projected $1.095 billion deficit for 2014-15.

So let’s take a look at a couple very basic scenarios of what an “all-cuts” solution to the budget deficit could mean.

allcuts

Each of these scenarios essentially looks at across-the-board cuts (it’s unlikely that an actual GOP proposal would work this way, but we’re just trying to illustrate some of the potential impacts).  Keep in mind as you’re looking at these options that the baseline budget for the state does not include inflation, so you can add an additional $890 million to the cuts — effectively meaning that an “all-cuts” approach would cut nearly $2 billion in real spending from the budget.

The first scenario would hold K-12 education harmless from the budget cuts.  Choosing this option would require an across-the-board cut of 5.5% to the other areas of the budget in order to achieve $1.1 billion in savings.  Holding K-12 harmless under this option could take two forms.  Either you could leave K-12 untouched (no cuts and no school shift payback) or you could play an accounting shell game and cut funding by 5% and apply that  to the shift balance (and $824 million cut/shift payback).

The second scenario (as suggested by a commenter here) would apply a 5% cut across-the-board and use any excess balance to pay back part of the school shift.  Such a scenario, would generate a $667 million shift payback, but the 5% cut to K-12 would be larger than the shift payback, resulting in a net $92 million cut to K-12.

Certainly, either option would continue squeezing some waste and inefficiency out of state government, but it would also have very real other impacts.  Cuts of this magnitude in Health and Human Services would limit the ability of those programs to service folks in need.  Cuts of this magnitude to higher education is going to make college less affordable for students.  Cuts of this magnitude to public safety are going to result in layoffs in our corrections and court systems.  Cuts in aid to local governments are going to put further pressure on property taxes.  Efforts to stop invasive aquatic species would be placed at risk.  Programs to encourage new business start-ups would be weakened.

There are plenty of things that could be reasonably objected to in the Dayton budget.  But there’s plenty of reasonable objections to an “all-cuts” approach, too.  The GOP leadership owes it to the state to put their choices on the table and let us see what their priorities are.

[Image courtesy All About Cupcakes]

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11 Responses to “Birthing the all-cuts budget”

  1. That’s awesome! It’s been a month, and we haven’t seen any new proposals from either side. I know why, do you?

    Both sides are waiting on the financials due at the end of the month. We’ll see how much larger our surplus is once again, and maybe even start to realize that a projected deficit is silly. I mean where were the projected surpluses we’ve been enjoying? I guess that didn’t make the news that everythibng was just fine and the state government has plenty of cash.

    It’s really too bad that we have to play these BS games in the media and elsewhere. Let’s revel in our success and keep government within it’s means.

    • Of course, both sides are waiting for the new forecast. However, the governor is required by law to present his budget proposal in January. It’s only fair to evaluate the other party’s alternative using the same baseline. If you have the courage of your convictions, then it shouldn’t worry you to put out a budget using the current forecast.

      Or maybe we should just wait on any budget proposal until after the February forecast, since legislative leaders in both parties in recent sessions have demonstrated they’re not going to do anything terribly substantive budget-wise until then. Let’s change the law and move back when the Governor has to issue his budget until after the February forecast, too.

      • Why? Isn’t it good to see where the gov stands? Isn’t he supposed to lead? I still didn’t see and projections of this surplus we are enjoying undeer the GOP reforms from last session. Where has that been?

  2. All things be equal in the next 2 years, (and I know they won’t be, they never are), I can’t see how we end up with a projected deficit anyway. We went from a 6 billion projected deficit to what, a 2 billion surplus, or more? We paid back 1.6 billion of the school shift, far more than what was borrowed last session, by nearly a billion extra, (and maybe more by the time this cycle ends). None of that was projected, now was it. So all things being equal, we’d have a surplus, and we’d have enough to finish paying back the school shift.

    We may be in new territory now that we’ve had a chance to see for ourselves how the GOP reforms are working, and state goverment is more efficient, and living within its means.

    Now of course some things will change. We’ll have higher or lower demands on health care costs depending upon how things shake out in those areas. But with a better economic picture, much of this could be offset if we could just get our nation under control, and get the economy booming again. Of course with the current organizer in charge, those chances are minimal, but somehow the market always finds its way, and is in spite of Washington’s stupidity. If we can ever stop turning the dollar into a diminishing peice of paper, we’ll all reap the rewards. Right now, I don’t see any sign of that happening.

    But enough about the national scene. We can’t fix that with our budget. But we can get by just fine with our current income, if we can be honest about our current surpluses, and what last sessions reforms have done for the fiscal health of our state.

    • On At Issue it seems folks are leery about making a prediction on the new projections. Right says lower projected deficit, but only by a couple hundred million or so, but could go the other way due to the fiscal cliff we hit in January. Left says higher or about the same.

      There are mixed economic indicators occuring right now. And it guess it depends on what the parameters for the Feb forecast includes. If it’s only to the end of 2012, then there should be a bump in revenues from folks cashing in on pre-hiked capital gains, and the tax hikes for 2013 shouldn’t have had an effect yet. ALso if it includes Feb numbers, the market is up, but housing starts are down. OK, the market was up, until today, anyway. But I can’t image the report is THAT up to date.

      So, any guesses? Will the projected deficit be lower, higher, or even gone? Just a few days to wait and see. I haven’t heard much, but then again, I’ve not been asking around either. Too busy right now.

      • My sense is that we’ll see a bit more in surplus for the current biennium, and little change for 2014-15.

        • Why do we continue to have a surplus now, but won’t in the projections? Why does running with a surplus come to an end? What changes?

          • The February forecast is going to take into account the positive revenue results in November and December (which are likely to increase the surplus in the current biennium), but by most accounts, consumer activity has weakened since the payroll tax cut ended and many folks accelerated taking capital gains in 2012 in order to avoid the risk of a tax increase so the long-term picture hasn’t changed or maybe even slightly weakened from the November forecast.

            • But we’ve been enjoying a surplus for quite some time now. Enough to pay back 1.6 billion in school shifts. Did the federal government ruin our chances for continued surplus? Are you saying higher taxes are hurting the economy and thus the state revenue?

              • There’s a lot of moving pieces. Perhaps you should just read the November forecast to understand how they come to that conclusion.

                Clearly, the payroll tax increase was not helpful, though.

                • Yeah, but the payroll ta is probably the fairest tax we have, and we need to keep funds moving to that to keep SS solvent. Not that it’s not just a shell game anyway.

                  The problem I see in the projections is the Education Entitlement growth. If these are really going to grow by more demand, then that ought to mean more taxpayers as well. HHS I get somewhat due to the aging population and people living longer. but I’m also betting some efficiencies could be realized there, and isn’t Obamacare supposed to help with this? I mean why are we all paying higher preimiums if it’s not to insure more people?

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