Graph of the Day: The Minnesota budget

/ 26 November 2012 / eunice

Alex Christensen, Twin Cities Daily Planet, Blog Post, November 26, 2012 – In January, the Minnesota Legislature will reconvene with a new makeup: Progressives will have a majority in both chambers for the first time in over 20 years. Although this is a big win, a fiscal mess awaits them. Minnesota Management and Budget projections show at least a $1 billion projected deficit. That does not include the $2.4 billion IOU to school districts.

So, balancing the budget while continuing to provide vital services to Minnesota residents will be a top priority, and not an easy one. Before the start of the legislative session, it is important to get a good sense of what the state is spending money on, and where it gets that money.

About two-thirds of Minnesota’s budget goes to health and human services and education. Transportation funds account for 10%. All other programs receive less than 5% of the state’s pie. These numbers don’t account for municipal and county level revenues and expenditures—which fund many services such as parks, libraries, snow removal, and public safety.

Source: Minnesota Management and Budget (click to enlarge)

The other half of the budget picture is revenue. At the most general level, there are three major sources of revenue in Minnesota: federal grants (31%), individual income tax (26%), and sales tax (16%). There are several other revenues that account for a few percent of total revenue. Keep in mind that most property taxes are assessed at a county level and that an growing amount of K-12 spending is coming from local levies.

Source: Minnesota Managament and Budget (click to enlarge)

Looking at the inflows and outflows of cash to the state, it’s clear that there will be no easy decisions when trying to fix the budget – especially at a time when the number of people depending on the social safety net is so high. Complicating matters is the 31% of the budget that comes from federal grants. With the federal government teetering on the edge of the Fiscal Cliff, some of that money could get cut off, putting Minnesota in an even tougher budget spot.