State Budget Deficit Continues

The Department of Finance issued its February Forecast on Minnesota’s expected tax and revenue collections compared to state spending obligations over the next 18 months. The state budget has a deficit of $160 million according to the new forecast, which is a little less than the November 2003 Forecast.

While a state budget deficit is never good news for persons with disabilities who rely upon publicly-funded health care and community service programs, the announcement of a $160 million deficit is actually a temporary relief because it is less than projected last December and far less than the state faced in 2003. Last year, Minnesota had a $4.5 billion hole to fill in our state budget which was about 15 percent of total state spending. As many people with disabilities know all too well, the Governor and the Legislature filled the gapping budget hole with painful spending cuts, which have had many devastating consequences for the disability community all across Minnesota.

However, the relief may be only temporary because the state budget deficit projected for the next biennium, which begins July 2005, is $441 million, not including inflation, and would be over $1 billion if inflation were counted. The area of spending growth highlighted in the forecast for the next biennium is health care and long-term care caseloads and costs per person. Unfortunately, this isn’t good news for those who need health and long-term care or community support services. Although Minnesota’s economy is projected to grow, our state has regained only 13,000 jobs since losing 60,000 jobs in recent years. Our state relies on income taxes for over 40 percent of our revenue, so fewer jobs means less revenue.

Governor Pawlenty continues to maintain his pledge not to raise taxes as part of any budget solution. He has the strong support of the House of Representatives on this. Our state does have a budget reserve fund of about $630 million, which could be tapped to cover the current deficit. However, the officials warned that using the reserve to fix our entire deficit of $160 million might result in Minnesota having to pay higher interest rates to borrow, thus, worsening our budget picture even more. The spending in Human Services, which is over 90 percent of healthcare spending, is down very slightly, with basic health care down and continuing care and community services up less than 1 percent. This increase is due to a larger number of persons remaining in ICF/MR and nursing facilities and increased payments for the waiver for persons with developmental disabilities.

Pawlenty is expected to release his supplemental budget during the first week of March. Given the pain of last year’s cuts, no further cuts can be sustained by persons with disabilities. Among the cuts from last session, which are still hurting persons with disabilities, are:

co-payments for essential health care
the $500 limit on dental care for adults on MA which has cut access to dental care for many
loss of $125 or more per month for low-income families with a person with disabilities receiving SSI
elimination of Consumer Support Grant exception payments
limitations on all disability home and community waiver programs which have resulted in waiting lists
county cuts which affect a number of important services
elimination of Minnesota’s Services for Children with Special Health Needs Treatment Fund
premium and other cost increases for persons using Medical Assistance for Employed Persons with Disabilities
extended employment cuts and sharp parent fee increases.
It is very important that all persons with disabilities remain alert and active during the rest of this legislative session. Disability organizations can provide information about the specifics of the Governor’s supplemental budget so that if essential programs are again threatened, those affected can get necessary information on how to contact legislators and the Governor.

This legislative session may be short, so it is essential that anyone feeling the painful cuts from last session or facing any new limitations in the Governor’s supplement budget must contact their legislators during the month of March if you want to be heard.

Legislative decisions affect the lives of many with disabilities and legislators need to know the results of their actions.

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