You can find information on the current state budget at MMB’s budget and economic analysis webpage under the "Current" section on the "Forecasts and Updates" tab. State spending is divided into a series of separate funds, which are separate accounting divisions to keep track of certain revenues and expenditures that are specified in law. The General Fund receives the major state taxes on income, sales, corporate income, alcohol and tobacco, and the Legislature appropriates these funds for public purposes. Because the general fund is used for the general operations of the state, most of the budget decisions that are enacted into law during a legislative session are concerned with deciding how to spend money in the general fund. Other funds are often created to set aside certain revenues for special purposes. For example, taxes on motor vehicle sales, registrations, and gasoline are dedicated to special highway funds for road maintenance and construction. Hunting and fishing license fees are dedicated to the game & fish fund for fish and wildlife conservation programs. State law specifies several dozen separate funds that are used to segregate revenues and spending for various purposes.
Minnesota enacts budgets for a two-year cycle (a biennium), beginning on July 1 of each odd-numbered year. The budget approved for the current biennium remains in effect from July 1, 2011 through June 30, 2013. By law, the Governor must propose a biennial budget in January of odd numbered years. Once enacted by the legislature, the budget can be modified in the "off-year" legislative session. As a result of state forecasts and other changes, it has become common for the Legislature to enact annual revisions to the state’s biennial budget. These revisions are referred to as supplemental budgets.
Yes, this is both a constitutional and statutory requirement. According the Article XI, Sections 6 and 7 of the State Constitution the State is prohibited from borrowing money for operating expenditures outside of the current two year budget period and requires the State Auditor to levy a property tax to cover any deficit at the end of a biennium. Additionally, State Statutes require a balanced budget: Minnesota Statutes § 16A.11 requires the Governor to submit a detailed balanced budget to the legislature and Minnesota Statutes § 16A.152, subdivision 4, requires the Commissioner of Management and Budget, with the approval of the Governor and after consultation with the Legislature, to reduce State spending (allotments) if it is determined the State revenues for the current budget period will be less than State expenditures for that period.
The state’s expenditures for capital projects are unlike the operating budget, where expenses are compared to revenues and the budget must be balanced every year. Instead, the Legislature passes capital investment legislation, commonly referred to as “bonding bills”, to finance the state’s land purchase and building construction projects. MMB issues 20-year general obligation bonds to pay for the projects and programs in the bonding bills. Legislators do consider how much money will have to come from the general fund every year to pay principal and interest on the bonds when they are determining how large they want bonding bills to be.
Typically, the legislature passes larger bonding bills in even-numbered year sessions. To prepare for that, MMB asks state agencies and local governments to submit requests for appropriations for capital projects in the spring of each odd-numbered year. These requests are compiled and submitted to the legislature on a preliminary basis on July 15 of odd-numbered years and in their final form on January 15 of each even-numbered year. The Governor submits his proposed capital budget to the legislature along with the January 15 submission.
The legislature also frequently enacts bonding bills in the “off” odd-numbered year sessions, which are typically smaller in size and cover emergencies such as tornado or flood relief. However, this is not always the case. The legislature enacted a relatively large bonding bill in the 2011 special session which was approximately $500 million.
Capital projects includes land and buildings and improvements to buildings, such as additions and major renovations. These kinds of assets have useful lives of 20 years or more. Because land acquisition and new building construction are frequently very expensive and would be difficult to fund in one year, the state borrows money to pay for most of its capital projects by issuing general obligation (“GO”) bonds. This is similar to how an individual takes out a mortgage loan to buy a home. Under the State constitution, the bonds cannot be outstanding for more than 20 years. This provision makes sure that the length of the loan does not exceed the expected life of the assets financed by the bonds, which would not be sound fiscal policy.
One of the state’s debt management guidelines requires that 40% of state GO bonds are to mature within five years and 70% within ten years. This guideline was put in place to provide for fairly aggressive repayment of state GO borrowings.
MMB provides revenue and expenditure forecasts twice a year. These forecasts are used to determine the size of any deficit or surplus in the state’s budget. The November forecast is used to set the starting point for the budget, and is the basis for the Governor’s recommendations. The February forecast incorporates additional data and is used by the Legislature and the Governor to set the enacted budget.
Expenditure estimates in most spending areas are shown at the level of appropriations set in current law, plus any authorized spending carried forward from prior years. Entitlement programs--such as K-12 general education, intergovernmental aids, health care, and family support--are forecasted based on expected changes ineligibility, enrollment, and average costs. Wage and price inflation is included in the revenue estimates, which are based on current law tax rates. It is not included in projected current law expenditures.
Forecast documents can be found under the "Forecasts and Updates" section of the Budget and Economic Analysis page of the website.
"Fiscal notes" are documents that estimate the budgetary impact, including costs, savings or changes in revenue, of proposed legislation (referred to as "bills"). The chairs of the House of Representatives Ways and Means Committee, the Senate Finance Committee, or committees to which a bill has been referred may request that fiscal notes be completed for a bill. Fiscal notes are typically prepared by executive branch agencies affected by bills. All fiscal notes must be approved by the executive branch’s budget agency (the Minnesota Department of Management and Budget, or MMB). You can find completed fiscal notes here.
"Local impact notes" estimate the local financial impact on each type of political subdivision that would result from proposed legislation. Political subdivisions include local units of government such as cities, counties, and school districts. Local impact notes may be requested by the chair or ranking minority member of the House or Senate Tax Committee, the House Ways and Means Committee, or the Senate Finance Committee. The law assigns responsibility for coordinating local impact notes to MMB. To prepare local impact notes, MMB often obtains data or input from representatives of local government units or associations. You can find completed local impact notes here.