StateBudgetataGlance a 3 Minute Guide to the Minnesota State Budget

TheBiennialBudgetCycle
Minnesotaenactsbudgetsforatwoyearcycle(abiennium),beginningonJuly1ofeach oddnumberedyear.Thebudgetapprovedforthecurrentbienniumremainsineffect fromJuly1,2011throughJune30,2013.Bylaw,theGovernormustproposeabiennialbudget inJanuaryofoddnumberedyears.Onceenactedbythelegislature,thebudgetcanbe modifiedintheoffyearlegislativesession.Asaresultofstateforecastsandotherchanges,it hasbecomecommonfortheLegislaturetoenactannualrevisionstothestatesbiennial budget.Theserevisionsarereferredtoassupplementalbudgets.

BudgetandAccountingStructure

Stategovernmentisorganizedintoover100agencies,boards,andcommissionsrepresentinga widerangeofservices.Whilemanyofthelargeststateagenciesreportdirectlytothe Governor,electedofficialsorindependentboardsmanageothers.Allagenciesreceivetheir expenditureauthorityfromlegislativeappropriationsthatimposealegallimiton expenditures. Stateexpendituresareusuallymonitoredthroughanannualspendingplanpreparedbyeach agency.Theseplansensurethatspendingremainswithinauthorizedlevelsandare consistentwiththestatutorypurposeoftheagency.Thestatesaccountingsystemincludes morethan150discretefundsthatoperatemuchlikeindividualbankaccountswithspecific sourcesofrevenue. ThestateslargestsinglefundistheGeneralFund.Statecollectionsofindividualincome taxes,retailsalestaxes,business,andothertaxesaredepositedintothisfund.Expenditures fromthestateGeneralFundcanbemadeforanyauthorizedstateactivitysubjectto legislativeappropriationlimits.Otherstatefundsarelessflexible.Forexample,certain revenuessuchasmotorvehiclefueltaxesorhuntinglicensefeesaredepositedintofundsthat canonlybespentforthespecificpurposesestablishedinthestateconstitutionorinstate statutes.Inbudgetterms,thesearereferredtoas"dedicatedfunds."

WheretheMoneyComesFrom
Minnesotareceivesmostofitsrevenuefromgeneraltaxes,licenses,fees,andfederalgrants. Statestatutesdesignatewhereeachindividualrevenuesourcemustbedepositedand anyrestrictionsonhowitshouldbeusedtosupportstateoperatingexpenditures. 1

SourcesofStateRevenuesAllOperatingFunds 201213Biennium

ThechartbelowdisplaysthemajorrevenuesourcesforthestateinAll Operating Funds forthecurrentbiennium.TheDepartmentofRevenuecollectsmostofthegeneraltax revenues,whilefederalgrants,feesandotherrevenuesarecollectedbyvarious agencies.

Federal Grants 30.8%

Category Taxes FederalGrants Fees&Charges AllOtherRevenues

$inMillions $37,412 19,180 2,639 3,120 $62,351

Taxes 60.0%

Fees & Charges 4.2% All Other Revenues 5.0%

TOTAL

ThechartbelowdisplaysthemajorrevenuesourcesforthestateGeneral Fund inthe currentbiennium.

Sources of General Fund Revenues 201213Biennium

All Other Revenues 7.6%

Individual Income Tax 48.0%

All Other Taxes 6.8%

Category
Statew ide Property Tax 4.7%

$inMillions $16,262 9,362 1,799 1,581 2,292 2,571 $33,867

Corporate Income Tax 5.3%

Sales Tax 27.6%

IndividualIncomeTax SalesTax CorporateIncome StatewideProperty AllOtherTaxes AllOtherRevenues TOTAL

WheretheMoneyisSpent
ThestatescurrentoperatingbudgetfortheFY201213Biennium(fromalloperating fundsources)is$62.6billion.Aseparatecapitalbudgetisthesourceoffinancingformajor building,renovation,andlandacquisitionprojects. Stateexpendituresaregroupedintobroadcategoriesofservices: K12Education,statesupportforkindergartenthroughgrade12education HigherEducation,statefundingforpublicuniversities,stateandcommunitycolleges PropertyTaxAidsandCredits,localgovernmentaidsandgrantsprograms, propertytaxrefunds HealthandHumanServices,fundingformentalhealthandotherinstitutions, publicassistance,healthcare,earlychildhoodandgeneralpublichealthprograms PublicSafety,includesstatecourts,correctionalinstitutions,andcrimerelatedprograms Transportation,transportationsystems,highwayconstructionandmaintenance, andtheMinnesotaStatePatrol Environment,EnergyandNaturalResources,programsforenvironmentalprotection, recreation,andeconomicvitality Agriculture,agriculturalprograms EconomicDevelopment,programsforimprovingopportunities,growthand economicsuccesstoindividuals,businessesandcommunities StateGovernment,includingadministrative,constitutionaloffices,andlegislative agencies Other,miscellaneousexpenses,paymentofprincipalandinterestonstatebonds

DistributionofStateSpendingAllOperatingFunds
2012-13 Biennium

K-12 Education 25.3% Agriculture 0.3% Property Tax Aids & Credits 4.5% Economic Development 1.9% Higher Education 4.2%

Transportation

Category Health&Human K12Education HigherEducation Transportation6 PropertyTaxAids& PublicSafety Environment,Energy& DebtService&Other EconomicDevelopment StateGovernment Agriculture TOTAL

$inMillions $26,137 15,806 2,638 6,154 2,833 2,258 2,103 1,676 1,211 1,592 183 $62,591

9.8%

Public Safety 3.6% Environment, Energy & Nat Res 3.4%

Debt Service & Other 2.7% Health & Human Services 41.8% State Government 2.5%

Stateexpendituresareprimarilypaidforbygeneralstatetaxrevenues,federalfunds,fee revenues,andothersourcessuchasearnedinterestandlotteryreceipts.Thecapitalbudget isprimarilyfundedthroughgeneralobligationbonds.Principalandinterestonstate generalobligationbondsispaidbythegeneralfundintheoperatingbudget.

TheGeneralFundStateOperatingBudget
Approximately$34.1billion,orabout53percent,ofstatespendingfortheFY201213 bienniumispaidbythestateGeneralFund.BecausetheGovernorandlegislaturehavethe greatestdiscretionoverhowgeneralfundrevenuesarespent,thegeneralfundbudgetis usuallytheprimaryfocusofstatebudgetdeliberations. Thefollowingchartshowshowgeneralfundspendingisallocatedinthecurrentbiennium. Overthreequartersofspendingoccursintwoprimaryareas:educationandhuman services.Aboutonehalfoftotalspendingisforeducation,whichincludesthestateshareof fundingforpublicschools(K12),fouryearcollegesanduniversities,andtwoyear communityandtechnicalcolleges.HealthandHumanServicesspendingaccountsfor32 percentofthebudget.

General Fund Spending

2012-13 Biennium Category
Health & Human Sv cs 32.0% Public Saf ety 5.3% Transportation 0.4% Property Tax Aids & Credits 8.3% Higher Education 7.5% Env ironment, Energy & Nat Res 0.8% Debt Serv ice & Other 1.4% State Gov ernment 2.7% Economic Dev elopment 0.5% Agricultu re 0.2%

$inMillions $14,486 (552) 2,566 2,836 10,895 1,815 126 258 481 920 177 80 $34,088

K12Education K12PaymentShifts HigherEducation PropertyTaxAids&Credits Health&HumanServices PublicSafety Transportation Environment,Energy&NatRes DebtService&Other StateGovernment EconomicDevelopment Agriculture TOTAL

K-12 Educ ation 40.9%

HistoricalGeneralFundSpending
Inthelasttwentyyears,thestategeneralfundbudgethasmorethandoubledgoing from$14.497billioninFY199293tothecurrent$34.088billioninFY201213.The201011 bienniumspendingreflectsalargedecreaseduetotheeconomicrecession.

Biennium
199293 199495 199697 199899 200001 200203 200405 200607 200809 201011 201213

$inthousands 14,496,834 16,739,762 18,629,098 21,193,108 24,179,031 26,648,114 28,128,405 31,489,542 33,866,405 29,961,691 34,087,742

$Change 861,460 2,242,928 1,889,336 2,564,010 2,985,923 2,469,083 1,480,291 3,361,137 2,376,863 3,904,714 4,126,051

%Change 6.3 15.5 11.3 13.8 14.1 10.2 5.6 11.9 7.5 11.5 13.8

AnnualGeneralFundSpendingChanges
Toprovideperspectiveorcontextforcomparison,changesinstatespendingare comparedtochangesininflationandpersonalincome.

GeneralFundSpendingGrowthComparedtoInflation
15% 10% 5% 0% -5% -10% -15% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Fiscal Year Spending Inflation

Personalincomeisameasureofhowmuchmoneypeoplemake.Itisincomereceived byallpersonsfromallsources. GeneralFundSpendingGrowthComparedtoPersonalIncome

15% 10% 5% 0% -5% -10% -15% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fiscal Year
Spending MN Personal Incom e