Stoneage Ramblings

By John R. Stone

Minnesota Legislators are going to have a difficult time next year. Their chief job next year is to create a budget for the biennium that starts July 1, 2025.

This is usually never an easy process. This year it will be interesting because, as of this writing, the Minnesota Legislature will have an evenly split House between Republicans and Democrats, Democratic control of the Senate and a Democratic governor.

The House of Representatives is evenly split now but there may be a court case or two covering two extremely close races, one won by just 15 votes. At issue there is a matter of 20 absentee ballots that cannot be accounted for.

If the political balance of state government isn’t enough, the change of leadership in the United States from the President to Congress leaves states with a lot of uncertainty.

Currently the government is operating under continuing resolutions, in other words, there is no Fiscal 2025 budget, just resolutions to continue funding at what were previous levels.

Republicans made a lot of promises about cutting funding for various programs as did President-elect Donald J. Trump. He has appointed two men, Elon Musk and Vivek Ramaswamy, to lead a budget cutting effort by identifying programs they feel the nation can do without.

This budget cutting effort will likely not be as extreme as Musk and Ramaswamy would like to see because members of Congress have their own pet programs they will not like to see cut.

Even so there will be cuts but it is very hard to predict what they will be because who knows who is going to stand up in Congress and say “no” to certain cuts. There will no doubt be compromises between individuals and parties that are hard to predict.

There may not be major changes in the Federal budget before its year ends on September 30, 2025 but the Federal government’s next financial year starts on October 1, 2025 and it is realistic to believe that some cuts will be in place by then.

According to USA Facts, Minnesota received roughly $20 billion in Federal money in fiscal year 2021 or roughly $3,500 per person. Federal money amounted to 14.6% of the budget that year.

The state handles a lot of money for the Federal government for a variety of programs, especially those that deal with a variety of aids to families. There are also programs to aid farmers, potential tariffs that will affect local businesses, student loan funds, the Affordable Care Act and many more.

If that money gets cut back to save the Federal budget money, the issue will be whether or not Minnesota can afford to run the programs from its own revenues or whether it will forced to scale them back, shut them down or raise revenue itself.

There is usually a huge fuss about a single program or two in a budget year, can you imagine what it will be like with the potential of a bunch of programs requiring some change?

This is the scene under which the Legislature must establish a budget. There will very likely be cuts to programs but it will be hard to know which ones by May when the Legislature must complete its work. But our legislature must budget through June 30, 2027, a full two years, which means that will require a lot of guesswork

Now there is no question that somehow the Federal government needs to stop borrowing so much money. It has to raise revenue or cut expenses or both.

Minnesota Legislators will be facing a huge challenge trying to guess what Congress might actually do, and when it will do it, to be prepared for it in the Minnesota budget.