Balancing the state's budget in the face of the largest deficit since the early 1980s is the major task of the current legislative session. As lawmakers gear up to make serious cuts in state spending, labor leaders are determined that working people's voices be part of the process.

Root of the problem
Minnesota has a projected budget shortfall of $4.56 billion. This includes a $356 million deficit for the current fiscal year, ending June 30, 2003. Minnesota operates on a two-year budget cycle. The remaining $4.2 billion is what the state is expected to be behind for the next biennium.

These figures, released by the Minnesota Department of Finance, are not adjusted for inflation. Analysts say the actual shortfall for the 2003-2004 fiscal year may increase by $1 billion or more. While the Legislature and Governor Tim Pawlenty are acting to cover the deficit for the current biennium, the cuts that most concern labor leaders will be presented in the governor's proposed budget in mid-February. The Legislature then has until the third week of May to approve the budget.

The cause of Minnesota's financial trouble is difficult to pinpoint. Many blame deteriorating economic conditions following the Sept. 11 terrorist attacks, a factor that has contributed to budget deficits in 40 states besides Minnesota. 'A plummeting stock market, sluggish economy, increased health care costs, and flat wages contributed to the ballooning of the deficit in the past six months,' according to a recent AFSCME Council 6 analysis.

While national economic factors play a role, changing tax policy may also be to blame. Income tax reductions, property tax reduction for businesses and high-cost homes, reduced automobile license fees for higher-valued cars and the nation-wide tax refund colluded to put Minnesota in the hole. 'If we still had the tax system we had before (former Governor Jesse) Ventura took office, we would have a very small deficit problem,' said Wayne Cox, executive director of Citizens for Tax Justice.

Where cuts may be made
All state departments and services are vulnerable to cuts this legislative session, said Minnesota AFL-CIO Legislative Director Brad Lehto, 'especially transportation, administration, health care and human services.' The larger the department, the more likely that some cuts will be made to it. Legislators are faced with determining which services are least essential. But services are not equally valued by all.

'One person's view of too much fat in government is someone else's necessity,' noted Lehto. For this reason, services used by a smaller percentage of the population, such as welfare benefits or the WIC (Women, Infants and Children) food program, are especially at risk.

Education, the largest area of state spending, tends to be where cuts are most feared. In 2002, 37 percent of state general fund expenditures went to K-12 education. AFSCME Council 6 Executive Director Peter Benner points out that although Pawlenty originally promised that education funds wouldn't be reduced, he now calls cuts to the Department of Children, Families and Learning a 'last resort.'

In the K-12 system, 'many parents now face hundreds of dollars of extra fees,' said Cox. 'Children that used to catch a bus are now told to walk. Classroom sizes are on the way back up.' These problems will likely accelerate as more cuts are made.

The impact is also expected to be great on higher education. Already, 'Minnesota has raised tuition for college students by 25 percent,' said Cox.

Impacts on working people
A worsening economy means there will be a greater demand for social services, said Lehto. Although the cost of living remains stagnant, unemployment is on the rise and wages are declining. 'This puts workers further and further behind,' he said. Additionally, every budget cut which translates to job loss for public employees increases the state's spending on dislocated worker and other social programs.

It's important for Minnesotans to realize that cuts in spending will mean cuts in services, Lehto said. The governor and Legislature need to consider other alternatives, labor leaders said.

'We won't be popular for saying it, but temporarily rolling taxes back to previous levels' would begin to make up for Minnesota's shortfall, said Lehto. The Minnesota AFL-CIO and Citizens for Tax Justice are in the process of developing a lobbying proposal which will likely include some changes in the tax system. The main focus will be fairness. The tax cuts of recent years provided the most benefit to the wealthy; cuts in services will disproportionately hurt the middle class and those with the least ability to pay.

Regardless of the eventual solution to the budget problem, labor leaders agree that public education about budget issues is essential. 'The citizens of Minnesota must understand that something they and their family use may be cut,' said Benner.

AFSCME will be 'doing one-on-one work with our members - how to write to legislators, lobby, etc.,' Benner said. 'We will be asking our members to speak to their representatives.'

There must be a 'real dialogue' with the people of Minnesota, said Lehto, adding that lawmakers need to be aware that there are serious consequences for each cut they make.

Erica Blythe Roy, a student at Macalester College in St. Paul, is an intern with Workday Minnesota.

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