Legislators holding town hall meeting on budget deficit today in Bemidji
ST. PAUL -- Minnesota lawmakers, for the most part, can't help but wonder how the state will solve what could be a $7 billion state budget deficit.
While participants in Wednesday's Bemidji Day at the Capital didn't come with their hands out asking for money, many of the lawmakers they visited started off by shaking their heads and saying, "I hope you're not here asking for money, because there isn't any."
With a downturn in revenues expected in the next two-year state budget cycle, with $32 billion in revenues expected, the next budget forecast March 3 is expected to show a budget deficit of $6 billion to $7 billion, up from the $4.8 billion forecasted in December.
"I'll give you an idea how bad this deficit is, and I don't think people in the state still understand it," said Rep. Tom Rukavina, DFL-Virginia, to a Bemidji team visiting his office Wednesday.
He read a "Just how bad is the budget deficit?" list prepared by Rep. Loren Solberg, DFL-Grand Rapids:
"If we cut all the kids from health care in Minnesota and save $139 million, if we shut down 20 percent of all nursing homes in this state and save $190 million, we let all the prisoners out of our jails and save $950 million, we let all the sex offenders out and save $127 million," Rukavina read off.
"We close all the state parks -- that's $52 million," he continued. "We eliminate Meals on Wheels, where they bring meals to seniors in their homes, we save $7.1 million. We shut down 10 state college campuses, including Bemidji, that's $146 million. Then we close every, single state government around here -- Transportation, Revenue, Finance, Health, Public Safety -- and we save $3.45 billion."
And, says Rukavina, "we need $7 billion. That's the kind of mess we're in."
Adding it all up still leaves some $2 billion to find, according to Solberg's list.
Gov. Tim Pawlenty has put forth his budget, but it includes the earlier $4.8 billion budget deficit project, not the likely $7 billion new figure. He still holds to his "no new taxes" pledge, not raising taxes to balance the budget.
He calls for severe cuts in health and human services spending while offering a small increase to K-12 education. The Republican governor would shift about $1 billion in state payments to school districts into the next biennium and slash state aid to cities and counties.
Pawlenty would raise some fees, and issue about $1 billion in bonds to be repaid by the state's annual tobacco settlement payment.
Democrats who control the House and Senate say Pawlenty goes too far and needs to raise revenues as well as make spending cuts. Also, he relies too much on one-time monies that just shift a structural budget problem into the following biennium.
"We've got to get the governor to raise at least $3.5 billion -- half of that deficit -- in revenue," Rukavina said.
The Legislature wants to find out from Minnesotans what their budget priorities are and to react to the governor's budget. The DFL Legislature has yet to craft its own version.
Legislators Thursday and today are holding town hall forums across the state to gain that input, including one at 3:30 p.m. at the American Indian Resource Center on the Bemidji State University campus.
Yet to be figured into the state budget are funds under the federal economic stimulus package President Barack Obama signed into law on Tuesday in Denver.
That, too, is one-time monies, Sen. Mary Olson, DFL-Bemidji, told a delegation team from Bemidji to visit her in her Capitol office on Wednesday.
"It's important that Minnesota take full advantage of funds that we could use to act as a bridge through these economic difficulties," Olson said, "but I also think it's just as important that we have to plan for our long-term economic health.
"If we just worry about how we're going to spend our budget for two years and we don't care that we might be leaving a huge budget problem two years from now, we really won't have done our state a service," she added.
Olson said she was optimistic about Bemidji's future, despite the national recession.
"For one thing, we're going to have a major construction project that's going to add to our economy," she said, referring to construction of the $46 million Bemidji Regional Event Center that starts this spring.
"We really are becoming viewed more and more as the regional center for the northern third of the state, outside of Duluth and Fargo," the Bemidji Democrat said. "We're an educational center, a medical center and more and more becoming a business center too."
Bemidji's overall cost of living is perhaps lower, Olson said. "I think people in our area are just more self-reliant. ... People in our area are used to hunting for a part of their meat, we're used to gardening, we like to fish. We usually have extended family in the area. We're usually pretty connected with our churches and our faith community."
Bemidji has more infrastructure in place than other areas, she said, "and that's going to help us get through this."
Olson, however, is concerned about the high percentage of low-income people in the community, "that we don't put so much pressure on our health care delivery system that it threatens the existence of our hospital."
Driving up college tuition costs also has an effect, Olson said. People graduate "with a monumental debt," she said. Graduates "aren't going to be able to stay in Bemidji and find a job that would repay that debt."
As a result, students will look at where they can go to get the absolutely highest-paying job possible to pay off college loans. "At least statistically, those higher-paying jobs tend to be more in metropolitan areas, and we don't want to chase bright, young entrepreneurial people out of our community because our college tuition costs are so high."
Olson, who will probably chair today's town hall forum, said Senate staff has prepared a large thermometer showing the state budget deficit, and attendees will be asked to fill that thermometer in with budget solutions reaching the height of the proposed $7 billion deficit.
"Some of that may be able to be filled with the federal stimulus money," Olson said. "There's two ways to make progress on this thermometer -- one is to cut spending and the other is to increase revenue. The increase in revenue is always the less desirable alternative, especially when you have really difficult economic times."
"It's not going to be pretty," Rep. John Persell, DFL-Bemidji, said in an interview Wednesday in his State Office Building office. "How can it be pretty? Everything has to be on the table."
The economic stimulus monies won['t solve long-term budget problems, he said.