HANDOUT #2 4-15-2002~>
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-FridayFax-
A weekly legisIai'ive update from the League o/Minnesota Cities
Budget Reconciliation
Contra{tree: Offers offer
optimism
On Thursday evening, the Budget
Reconciliation conference commktee
considered an offer from the Senate that would
cover the remaining $439 m£1llon state budget
deficit for the current biennium and would
begin to address the 2004-05 projected biennial
shortfall. This morning~ the House responded
with their version ora compromise, The Senate
proposal was described as "baby steps" by
House chair Kevin Goodno while the House
proposal was descr{bed as ~*mosquito steps" by
Senator Doug Johnson.
Yesterday's Senate offer included $245 million
in one4{me savings by refinancing
transportation projects originally financed in
2000. The p[an~s other major components
include a one-time shift of school aid payments
that will save more than 5310 million this
biennium and the controversial increase {n the
cigarette and tobacco taxes that would generate
an additional 5313 milt{on tn revenue this
biennium and more than $453 million tn 2004-
April 12~ 2002
Page 1
million from cuts in environment and natural
resources programs.
On the posk{ve side,, neither the House nor the
Senate offers contain any cuts tn LGA or the
market homestead credk reimbursement,
However,, most of the Senate tax provisions
appear to have been dropped by both the House
and Senate~ These dropped provisions
apparendy {nclude the LGA increase for small
cities; the appropriation of $10 million for TIP
grants,~ the local sales tax authority for half a
dozen communities and modifications to levy
[{mits that would have provided a marginal
{ncrease tn levy authority in 2003.
The one provision that appears to still be alive
would provide a new pipeline aid to areas of
the state where the 2001 property tax class rate
changes dramatically reduced the available tax
base. This aid would most notably help
counties in Northwest Minnesota that
experienced large tax shifts to homes and farms
this year.
Senate members reacted by clMming that the
House offer represented very little movement
toward a compromise. Senate members also
expressed concern that the House offer would
~¼~- ~t~t~ w;th very little budget reserve
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