Budget Balancer Keys

Here are all of the options offered in the Budget Balancer. There are additional resources on the Learn More page.

Spending

E-12 Education

K-12 Education

-$500 million Shave a half-billion dollars out of the school budget and you could cut state taxes significantly or perhaps improve health care. But you would put school funding back at the 2003 level, forcing teacher layoffs and larger class sizes. Many school boards would ask voters to approve big property tax increases.
-$100 million Cut spending by this much, and you'd increase class sizes by 10 percent and force teacher layoffs. But does it really take $11,600 a year to educate a kid?
+$0 You're leaving K-12 state spending at about $12.8 billion over two years. Total per-pupil revenue is about $11,600 a year. That's more than the tuition at all but the pricier private schools. But public schools educate many hard-to-serve kids the private schools never see.
+$520 million You'd cover inflation by increasing per-pupil aid 2 percent a year. You'd also give $75 million a year to high schools that encourage students to take college-level work and provide $150 million in incentives to spur better math and reading instruction. One caveat: Some schools might put the $150 million into continuing programs they couldn't afford in the future.
+$685 million You're increasing two-year school funding 5.7 percent (inflation is estimated at 4.2 percent). In addition to encouraging successful schools and new rigor in high school classes, you would keep special ed funding up with inflation, expand summer school and upgrade technology. But why do schools need more than inflation?
+$1.6 billion You'd raise K-12 spending 5.7 percent, plus pay for all-day kindergarten for the two-thirds of Minnesota kids who don't have access to it. Twenty-nine states offer all-day kindergarten to all children. You'd also add nine days to the school year at a two-year cost of $612 million. Officials estimate Minnesota kids are in school an average of 171 days a year. Thirty-two states require 180 days.
+$2.6 billion With this kind of expenditure you could do everything in the previous options, plus eliminate the $500 million-a-year schools put into special education to make up for a lack of state or federal government funding. But, to do this, you almost certainly would have to raise taxes.

Pre-school

-$50 million You'd save money to spend on K-12 education, or other areas. But fewer kids would arrive at kindergarten knowing how to follow directions, sit still, play with others. And research from the Minneapolis Federal Reserve and others shows that money spent on early childhood education pays off handsomely down the line. Are you sure you want to cut?
+$0 You would leave state funding where it is, at about $95 million over two years. But here's a reason to change: Lots of research shows quality pre-school education programs help kids after they enter school. A reason not to: Parents, not the public, have traditionally paid to educate kids up to kindergarten.
+$38 million You'd improve existing programs and provide scholarships of about $4,000 a year to families who need help getting kids ready for kindergarten. A family of four earning up to $68,500 a year would qualify, and about 7,000 kids would get the scholarships. But not every kid who needs a better pre-school program would get it.
+$200 million You could give scholarships of $200 to $3,800 to each of 65,000 kids enrolled in a high-quality pre-school programs, depending on income. For many kids, the state money would mean better teachers and more academic programs. But you probably would be subsidizing pre-school for some kids whose families don't need it.

Health & Human Services

Health Care

-$1 billion You could save $1 billion by ending all state-subsidized health care and health insurance for about 70,000 low-income adults without children. Some might find other means of obtaining health care, but many would put off visiting the doctor; some might not get the care they need, and would die.
-$500 million Spending from all sources here is set to increase $2.5 billion in the next two years. To save $500 million, you could end state-paid health care for about 25,000 low-income adults without children. Most states don't provide this care. You'd force some of those who lose their coverage to the emergency room (the most expensive health care), shifting costs to other patients and property taxpayers.
+$0 Even with no action here, health care programs are obligated to cover 17,000 more people in the coming two years, driving built-in spending up three times the rate of inflation. And health care costs are rising fast. Your lack of action would leave 70,000 kids without insurance, derail improvements to state mental health care and perhaps leave Minnesota ill-prepared for the bird flu.
+$30 million Doesn't seem like a lot, but this money could pay to cover about 14,400 of the 70,000 Minnesota kids without insurance. You could also establish an insurance exchange to help small businesses and individuals buy insurance. More than 50,000 kids would still have no health insurance, but it's a start.
+$48 million You would do several things with this money: insure about one-fifth of uninsured kids; improve mental health care services and infrastructure; raise fees paid to dentists who treat poor people; help rural hospitals create electronic medical records; and spend $20 million preparing for a bird flu pandemic. It all sounds important. But is it all necessary?
+$300 million You would cover up to 40,000 of the uninsured, some kids and some low-income adults who lost coverage in 2003. You would let small businesses buy into the state-subsidized health insurance and reinstate family planning funds cut in '03. You would also improve mental health care. But you still wouldn't cover all kids.
+$500 million Finally, you would insure about 90 percent of kids--all but those from high-income families. You'd also restore care for some childless adults dropped from state programs in 2003, improve mental health services and restore family planning funds. But it's not cheap, and your kids' insurance plan would be so good it might spur some parents to drop family coverage they already have.

Long-Term Care

-$125 million You not only would ignore inflation, you'd also cut payments to nursing homes, home health care companies and personal care attendants by about 3 percent. It'd be nice to squeeze that money out of a fast-growing part of the budget, but you probably would drive a substantial number of nursing homes out of business. Where would those people go?
+$0 You'd make no allowance for inflation (estimated at more than 4 percent over the coming two years). That's equal to a cut of $150 million--and health care costs have been increasing faster than normal inflation. Some nursing homes and health care companies that offer in-home alternatives to nursing homes would close.
+$76 million You'd give an annual 2 percent inflationary increase to personal care attendants, home health services and other nursing home alternatives. Nursing homes would get the same--if they met performance goals. Minnesota's five veterans homes would get $15 million to improve care and facilities. It's a lot of money, but it would benefit the most vulnerable members of our society.
+$300 million You'd be giving nursing home operators and home health care companies what they've asked from the Legislature: Fee increases of 7 percent and 6 percent for the two-year budget. If you give them what they want, you'll have to give somebody else less or raise taxes.

Welfare & Other

-$80 million You'd keep the state and federal welfare program for pregnant women and families with children, but end state cash payments of about $200 a month to 16,000 very low-income childless adults. Most states do not provide welfare like this. The upside: You might spur some of the recipients to get jobs or work more. The downside: You would make more people homeless and hungry.
+$0 You would be deciding--for the 21st year in a row--to leave cash welfare grants largely unchanged. You'd also leave about 7,500 state employees without pay raises or force administrators to resort to layoffs to afford raises. You could do it, but would you want to?
+$48 million You'd give $40 million to counties to offset recent federal cuts to child protection and health and human service programs. You'd spend $10 million encouraging people to adopt kids out of foster care. And you'd spend $25 million on a 2 percent annual raise for more than 7,500 state employees who run those state institutions.
+$390 million You would update the purchasing power of cash welfare grants, which haven't increased since 1986. The money would go to 100,000 low-income kids, parents and pregnant women. For a family of three, the maximum cash and food assistance grant would increase from about $900 a month to about $1,340. The recipients could use it. Could other programs use it more?

Tax Relief & Rebates

Local Aid

-$300 million Some would argue that aid to local governments hides the true cost of services and discourages cities and counties from exploring ways to make tax dollars go farther, like sharing services and cutting spending. Cutting aid, though, would lead some cities and counties to raise property taxes and reduce services, including road maintenance, park programs and library hours.
+$0 Minneapolis, St. Paul and many outstate cities are arguing for more aid, saying that without it they'll have to raise property taxes and cut services. And you'd do nothing to change a system by which newer suburbs get far less aid and pay a bigger share of their costs with property taxes. No change here makes everybody mad.
+$65 million You'd be increasing aid to cities by $10 million a year--a bit less than inflation. You'd also give most homeowners a $38 annual tax cut. But lots of cities would still get significantly less than they got five years ago.
+$300 million Even if all of this went to cities, which isn't likely, they'd be only a little better off than they were in 2002. Without major state spending cuts or tax increases, you might not be able to afford this level of spending in the future.

Property Tax Relief

+$0 Sure, property taxes have gone up a lot in the last four years. But Minnesota's property taxes, measured as a percent of personal income, are still below the national average. We rank 37th in the country, according to the Minnesota Taxpayers Association.
+$40 million You can slow property tax increases by pumping $40 million of new aid into schools, partially rolling back 2005 tax increases to pay for schools. But it's still only a baby step toward addressing the property tax problem.
+$130 million You'd spend $40 million to lower property taxes, and another $67 million to simplify tax returns, making state tax law conform to federal law. This would give deductions for college tuition and supplies teachers buy for their students. You'd also end taxes on National Guard pay and military pensions. But are Guard members more deserving of a tax break than, say, firefighters or single parents?
+$300 million You'd lower property taxes and give the military tax breaks. Plus you'd reduce the corporate tax burden on Minnesota-based companies, help out dairy farmers and give an income tax break to venture capitalists. But don't the business tax breaks pick winners and losers? Shouldn't the market do that?
+$800 million Now you're talking real property tax relief. Local property taxes are projected to grow 8 percent in 2008, and 5.5 percent the following year. For $800 million, you could limit those increases to the rate of inflation, about 2 percent a year. But, even if the state could afford that kind of tax relief for a short time, it couldn't sustain it into the future.

Rebates

+$0 Some said they never noticed the earlier rebates, and that they preferred the money go instead to improve education, help poor people or meet other pressing needs. And it actually costs $2 million or more to process almost any type of rebate. But whose money is it, anyway? Individuals might well use the money better than government could.
+$500 million Married people and single parents would get an average of $300. Single people, half that. Not much, but they might pump it back into the state's economy. On the other hand, after four years of belt-tightening in response to budget deficits, the state could use this money to restore cuts and maybe make some long-deferred technology purchases.
+$1 billion It's the people's money. They earned it, the government didn't. But look at it this way: The state has been running deficits since 2003. Keeping this money and spending it wisely would make valuable contributions to many important programs.

Higher Education

University of Minnesota

-$50 million A cut of this size, 4 percent of current funding, might lead administrators and regents to close some programs, and focus the U on what it does better than other institutions. But cutting another $50 million would put the U further behind in its quest to become one of America's top three public research universities.
+$0 The U does far more than educate undergraduates. It also churns out research vital to the Minnesota economy. But state spending averages about $10,000 a year for every full-time student. Isn't that enough? Supporters of more funding argue, that without at least an inflationary increase the U would raise tuition higher than the 4.5 percent a year that's already planned.
+$155 million You'd increase funding 11 percent next year, followed by 3 percent. It would provide: $25 million in merit pay for the best professors, $38 million for U-Mayo Clinic research, $28 million to train health professionals, and an extra $25 million if the U meets goals. The U might still raise tuition higher than the 4.5 percent a year that's already planned in order to cover other pay raises.
+$220 million You would fund merit-pay and performance incentives, meet the U's requests for cost-of-living raises and add new money to improve libraries and encourage undergraduate research. You would also be supporting more research at Mayo. But by including cost-of-living pay raises, you might eliminate any incentive for the U to cut jobs and increase productivity.

MnSCU

-$50 million The MnSCU board and administrators would find a way to accommodate the cut. The result might be a leaner, more efficient system. But to get there, they might have to lay off 650 professors, or raise tuition about 3 percent a year -- on top of the 4 percent a year already planned. Students might have to spend more time in school to get into the classes they need, or bail altogether.
+$0 You're not keeping up with inflation. That means higher tuition, or cuts to staff and programs. And, like the U, the MnSCU system has no inflation built into its base. Without new money, it's already at a disadvantage. But, like the U, MnSCU could perhaps benefit from financial pressure to look for more efficiency within its current $1.2 billion in state spending.
+$125 million This is 10 percent above current spending. It would give MnSCU $60 million for technology infrastructure and a shot at getting another $25 million for meeting performance goals. You'd pay to recruit and retain more minority students, improve science and math teaching and improve the health-care curriculum. Still, you're not providing cost-of-living raises for faculty and staff.
+$200 million You'd give MnSCU everything its administrators are seeking, plus more. They could cut planned tuition increases from 4 percent a year to 2 percent a year. But here's a fact of life: In the budgeting process, nobody ever gives higher education what it seeks. Asking for a lot and settling for less is part of the process.

Student Aid

-$25 million You're cutting the basic grant from $1,769 a year to about $1,437. You could pump those savings back into higher education, and lower public tuition. Students at private schools would suffer. But, really, who thinks cutting need-based financial aid for college students--students whose grants still have not recovered from the budget cuts in 2003--is a good idea?
+$0 You're leaving financial aid funding at about $354 million. Students would have to cover higher tuition and living expenses without any additional help from the state. Most would find a way to do it, by working more or charging more on their credit card; some would drop out of school.
+$25 million You could increase the basic grant by about 4 percent a year, twice the rate of inflation. For some students the extra $300 a year could mean the difference between staying in school and dropping out. But are you sure you want to exceed inflation?
+$140 million Basic grants would keep up with inflation, increasing about $150 a year. You'd thank Minnesota's military veterans for their service by giving them up to $2,000 a year to attend college. Additionally, you could give low- and moderate-income high school kids more than $300 for each college-level course they take. But why should the state pay kids to take the courses they should be taking anyway?

Other Areas

Debt, State Agencies & Veterans

-$50 million This would be a reduction of about 3 percent. If you need to find some money for education or health care, this is an area that lawmakers and the governor have squeezed before. That's also a good reason not to squeeze it again.
+$0 Over the past four years, most state agencies responded to tight budgets by cutting staff. You could try to wring more productivity out of the system by leaving spending unchanged. Without an increase, all the agencies would, in effect, face a budget cut because of inflation, which is estimated at 4.2 percent for 2008-09.
+$120 million This would give 2 percent-a-year raises. That's enough for cost-of-living increases, but not enough to cover other raises. It would buy significant technology improvements and improve services for veterans. Agencies would still have to leave jobs unfilled to pay for raises officials expect to negotiate with public employee unions.
+$200 million You would make technology improvements and provide the full 3.25 percent-a-year increase in compensation for state agency employees that officials expect to face. But the agencies routinely leave jobs unfilled to accommodate such pay increases. They could do it again.

Agriculture & the Environment

-$30 million You could save $30 million a year by ending the 20-cents-a-gallon subsidy the state still pays to 10 older ethanol plants. Investors wouldn't be rushing to build new plants if they weren't profitable without subsidies. But a promise is a promise. In 2003, the state reneged on its promise by temporarily reducing the 20-cent subsidy to 13 cents. You would be reneging further.
+$0 Holding the line here would allow you to put more money into education and health care. But it would shortchange the environment. Forty percent of the lakes and rivers tested so far have failed to meet federal pollution standards. With a surplus, this could be the time to boost environmental spending.
+$85 million You would be making a significant increase--22 percent over two years--in agriculture and environment funding. Most of the money would go to clean up Minnesota's rivers and streams, promote renewable energy and improve timber production in Minnesota's forests. The 22 percent is nearly five times the rate of inflation.
+$200 million You'd fully fund the so-called Clean Water Legacy for two years. The project, pushed by environmental and farm groups and local officials, seeks $80 million to $100 million a year for 10 years to clean up polluted lakes and streams. The state might be able to afford the $200 million now. But for 10 years?

Jobs, Housing & Arts

-$25 million If you need the money for more pressing priorities, you could again cut the Historical Society and housing assistance programs. But more historical sites would have to close and lay off interpreters and other staff. If there was fat in any of these budget areas, four years of budget cuts has eliminated it.
+$0 If you had to, you could leave the funding for all these areas where it is now, and many wouldn't notice--at least not immediately. But these are all important functions that contribute to our quality of life--though the benefits are hard to measure. Economic development is an important investment in a global economy that pits states against states and the U.S. against other countries.
+$15 million You could restore funding for the arts to its pre-2003 level. A reason to do it: Now that the state has money, it's only fair to restore the funding. A reason not to: The arts are nice, but are they necessary?
+$80 million You'd provide incentives to make Minnesota energy-independent, including grants to gas stations to install pumps selling Minnesota-grown E85 fuel. You'd also provide $35 million in housing subsidies for low-wage workers and homeless people. In the long run, education spending, rather than housing subsidies, might produce higher wages that would allow people to buy or rent market-rate housing.
+$130 million You would restore money lawmakers and Gov. Pawlenty drained from the 21st Century Minerals Fund in '03. The fund was intended to diversify the Iron Range's economy. Replacing the money would be only fair. But critics call the account a slush fund for Iron Range communities and their politicians.

Transportation

+$0 Most transportation spending comes from sources other than the General Fund. Legislators and the governor should figure out how to fund transportation before turning to General Fund dollars. Then again, anyone who travels the Twin Cities freeways knows transportation is a big problem.
+$65 million You would follow the spirit of the Constitutional amendment and transfer the sales tax on vehicle leases from the General Fund to the special Highway Trust Fund, just as the sales tax on car purchases is being transferred. Some money would go to transit, some to highways. There's no good argument against this. It fits the spirit of the amendment.
+$185 million You'd transfer the sales tax to the special Highway Trust Fund, hire 40 more state troopers and add 20 security guards in the lightly patrolled Capitol. You also would spend $100 million from the General Fund on roads. Supporters of a gas tax increase would argue it makes more sense to raise the gas tax, which has been 20 cents a gallon since 1988.

The Law & Public Safety

Prisons

-$50 million You'd be spending less on prisoners to focus on Minnesotans who pay their taxes and don't commit crimes. You'd probably also put more prisoners on the street. A $50 million cut would require you to lay off 1,000 guards and perhaps close two prisons.
+$0 Corrections officials say they need another $30 million just to cover inflation in salaries for guards and other employees. These are not easy jobs and the prison population is growing.
+$70 million You'd increase the number of parole officers and help former inmates readjust after they return to their communities. You could also increase pay and benefits for guards by more than 4 percent a year, twice the rate of inflation. That would ensure prisons don't cut staff. But why should prison guards be protected from layoffs when other state employees are not?
+$100 million You could maintain the prisons and put significant money into re-entry programs that would supervise former inmates, help them find jobs and maybe keep some from returning to prison. The alternative: Spend that money on law-abiding citizens.

Courts & Public Defenders

-$50 million That's 6 percent. Cutting spending here would allow you to use the money for higher priorities. But what's a higher priority than justice when people are forced to go to court?
+$0 Not spending more here would allow you to spend more in areas like education and health care. But, without an inflationary increase, you probably would lose some judges who could earn more as private attorneys.
+$70 million You'd boost spending for the courts, public defenders and state law enforcement by about 8.4 percent, twice the rate of inflation. You'd also raise judges' pay, add 20 forensic scientists to the state crime lab and help police departments share and store fingerprints. They're all important, but are they worth twice the rate of inflation?
+$100 million You'd give courts almost everything they asked for: Judicial pay raises of 5 percent a year; a dozen new judges and some new special courts for drug crimes. The raises would help attract good attorneys to serve as judges. A reason not to increase spending that much: Judges already earn $122,000 a year.
+$120 million On top of the changes already outlined, you'd dramatically increase the number of state public defenders, who now each handle an average of 745 cases a year. You also would pay for public defenders to represent more low-income parents in child-protection cases. It'd be nice. Is it more important than other priorities?

Budget Reserves

Budget Reserves

+$0 Leaving the reserve accounts where they are probably would not affect the bond rating, either way. On the other hand, given the overall size of the budget, it's not a bad idea to chuck some more money into these accounts.
$50 million You would increase the rainy-day reserve to $700 million and keep the cash-flow account where it is. That would bring the reserve to 4 percent of annual spending. In relatively flush times like these, it's prudent to build up the reserves. The question is: Is a $50 million increase enough?
$700 million This would get the current reserve and cash-flow account to 5 percent of two-year spending. That's the level recommended by the Council of Economic Advisers, a group of public- and private-sector economists that advises state officials. The trade-off would mean less money to spend on important things like education and health care.

Resources

Income Taxes

Personal Income Tax

-$500 million Cutting $500 million would, on average, save every adult and child in Minnesota about $200 over two years. You could, in theory, afford a $500 million tax cut over the next two years. But, without significant spending cuts, you could not afford it in the two years after that.
+$0 You're leaving Minnesota with an income tax that's significantly higher than most states. But people complain far more about property taxes than income taxes. Lowering the income tax might make Minnesota more competitive in attracting jobs, but it's hard to argue with success: We're ninth among the states in personal income.
+$100 million You would impose a new income tax rate of 8.15 percent--above the current top rate of 7.85 percent--that only the wealthiest Minnesotans would pay. You'd tax those most able to pay it and who most benefited from 1999 and 2000 income tax cuts. But you would move the state up in national tax rankings and make state tax collections more susceptible to big dips during recessions.
+$465 million You'd raise the top income tax rate from 7.85 to 8.5 percent on 170,000 higher-income people, returning to its 1998 level. Individuals with taxable incomes over $70,000 and couples with incomes of $124,000 would be affected. The cost for a single taxpayer earning $100,000: about $90 a year. You could spend more, but you might deter entrepreneurs from building businesses in Minnesota.
+$1.7 billion You would move income rates back to where they were in 1998. And you'd be making the state and local tax system more progressive. You'd also wipe out progress the state made toward erasing its high-tax image. Our overall state and local taxes would move up from 20th in the country to 11th. More wealthy retirees would switch their residences to Florida and Arizona.

Corporate Income Tax

-$585 million You'd cut Minnesota's 9.8 percent rate, the fourth-highest in the country, to 7 percent. We'd be tied with North Dakota, and a bit below Wisconsin. And, because businesses pass taxes onto consumers, taxes overall would be more progressive. But businesses get services from the state--an educated workforce, a court system that referees their squabbles, etc. Shouldn't they pay for what they get?
+$0 The corporate income tax's share of state revenues has been declining, until recently. Leaving the tax as it is would keep firms with lots of payroll or property in the state at a disadvantage. Changing it would create some new losers.
+$285 million Legislators have talked about tightening tax rules on Foreign Operating Corporations for years and tried to in 2005. You would close a loophole that allows some firms to reduce their taxes by routing domestic income through foreign subsidiaries. But the 2005 law took care of some of the worst abuses. Tightening the law could hurt some Minnesota businesses with legitimate overseas operations.

Sales Taxes

Sales Tax

-$680 million You'd cut the tax rate from 6.5 percent to 6 percent, making the overall state and local tax system a little less regressive. On the other hand, cutting the sales tax would make Minnesota more dependent on the income tax, and that would make total tax collections more volatile and more likely to drop during recessions.
+$0 You'd leave the sales tax alone. After all, no one's really complaining about it. And the sales tax disproportionately affects people with less money (it's regressive)--raising it would make it moreso. But you can raise a great deal money with some small moves here, and you can spread the pain fairly widely.
+$680 million You would raise the tax rate from 6.5 percent to 7 percent. Any increase in the sales tax would put a greater burden on people with less money. But it would also make the system less volatile, especially during recessions. That's because people still buy things, even if their salaries and investment earnings are stagnant or falling.
+$900 million You would be extending the sales tax to clothing, joining the other 46 states that already tax it. Because the Mall of America is a magnet for out-of-state shoppers, non-Minnesotans would bear part of the increased tax burden. Unless you provided a credit for lower-priced clothing, you'd increase the tax burden on low-income shoppers.

Cigarette & Alcohol Taxes

Cigarette Tax

-$300 million Lots of lawmakers argued in 2005 that the 75-cent cigarette fee was regressive, but it was the best of some bad options for raising school funding. The current surplus is an opportunity to repeal the fee. Doing so now might require future budget cuts or tax increases. It also might encourage some people to start smoking, or smoke more.
+$0 The cost of smoking grew dramatically just two years ago with the imposition of the 75-cent health impact fee. Smokers could use a break from further increases. But an increase could help some people quit smoking, and maybe keep some teens from starting.
+$100 million In 2005, lots of lawmakers talked about increasing the tobacco tax by $1, instead of 75 cents they eventually approved. This would raise the fee by that extra 25 cents, or 17 percent, and further discourage smoking. But only one-fifth of all Minnesotans smoke. Should the state spread the tax increase more widely?

Alcohol Tax

+$0 The taxes on liquor, beer and wine are not a big source of revenue. You're not going to get a lot unless you raise them significantly. But raising them might discourage problem drinking, and help the state pay for alcohol and drug prevention and treatment.
+$55 million You could raise $55 million by increasing taxes on beer, wine and hard liquor the equivalent of 2 cents a drink. Who would notice it? But it would affect low-income people the most.
+$140 million To get $140 million, you'd have to raise taxes a nickel-a-drink on beer, wine and hard liquor. The arguments are the same as for a 2 cent increase. It might reduce some problem drinking, but the increase would be regressive because lower-income people would use a higher percentage of their income to pay the tax.
+$280 million You'd raise taxes a dime-a-drink on beer, wine and liquor to pay for alcohol and drug treatment and prevention. This would make the tax even more regressive. But alcohol use cost the state $4.5 billion in 2001--17 times the $260 million the alcohol sales tax generated in 2004. This would defray those costs, and help some lay off the booze.