State Budget Woes

And how do we get a Democrat as the head of the Ways and Means Committee?

The looming budget shortfall of at least $11 billion (assuming there is more than $1 billion freed from the school fund) for the next two-year budget period is consuming lawmakers’ attention.

But the Select Committee on Fiscal Stability, headed by Rep. John Otto, R-Dayton, is looking further into the future.

At lawmakers’ committee meeting this morning, they’re pushing to separate the part of the shortfall that’s built into the budget structure from the part that’s due to the recession.

One item that has put a big strain on the budget is the 2006 school finance reform that shifted some $7.1 billion annually in school costs from local school property taxes to the state.

The state raised business taxes, cigarette taxes and motor-vehicle-sales-related revenue in an expectation of making up 60 percent of the cost.

But the new business tax has underperformed. The new state taxes are covering just 36 percent of the cut in school tax rates. That means the rest — about $4.6 billion a year — must be paid from general revenue.

Rep. Rene Oliveira, a Brownsville Democrat who heads the Ways and Means Committee, said the state will take 5 to 6 years to climb out of the recession. He said lawmakers must do something now or future shortfalls will make the current one look minimal.

In seeking the part of the shortfall that’s due to the structural deficit, Oliveira said the question is, “What is the real gap we need to close for future legislatures to not be looking at meltdowns or people out there screaming for an income tax when there’s blood on the streets?”


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