Governor Walz’s budget recommendations for the Department of Employment and Economic Development received an informational hearing on Monday in Senator Pratt’s Jobs and Economic Growth Finance and Policy Committee. The Governor’s budget recommendations were based on the economic data provided by Minnesota Management and Budget in November which forecast a slight deficit in the upcoming biennium. In order to address that deficit and offset some increased general fund spending to the Minnesota Housing Finance Agency, the Governor’s DEED budget contains a two-year reduction to the Minnesota Investment Fund as well as the Job Creation Fund and does not include new base level funding for the Redevelopment Grant and Demolition Loan Program. EDAM submitted a letter to Senator Pratt in advance of his committee hearing on the Governor’s budget recommendations outlining our concerns with the cuts to these key DEED programs and highlighting Senate File 585, which maintains base funding for MIF and JCF while also establishing base funding for Redevelopment.
Governor Walz released his bonding proposal for the 2021 Legislative Session yesterday, a package of just over $500 million with $240 million in general obligation bonds and $250 million in appropriations bonds. The bulk of the general obligation bonds are dedicated to maintaining facilities at Minnesota State and the University of Minnesota as well as funding for the DNR for upkeep to parks and trails. $150 million of the appropriations bonds are for redevelopment in Minneapolis and Saint Paul in response to last year’s civil unrest. The other $100 million in appropriations bonds are for housing infrastructure bonds to build and repair affordable housing. While 2021 is not the traditional bonding year, there has been talk of a smaller bill this year to provide jobs and maintain state assets. This is an area where bipartisan cooperation is needed as a bonding bill requires a 60% supermajority to pass.
MMB will provide an updated budget forecast on Friday. If there are changes from the last forecast in November the Governor is likely to release supplemental budget recommendations to reflect the updated fiscal picture. Given the state’s uptick in sales tax collection in the early part of the year there is some cautious optimism that the budget update may bring good news and help our divided Legislature reach an agreement on establishing a two-year state budget.