By Shannon Fiecke, Correspondent 

Although it was a bonding year, the 2008 Legislative session featured a litany of bills ­— more than 4,000.

When all was said and done, some 300 bills were passed that managed to close a nearly $1 billion budget deficit, give additional funding to schools and set forth property tax relief.

Local impact

The Legislature provided additional property tax relief, but at the same time capped how much local governments can increase property taxes, said Sen. Claire Robling, R-Jordan. 

Besides allocating $25 million in direct tax relief to qualifying homeowners, the state will give an additional $60 million in aid to local governments. However, at the insistence of the governor, legislators agreed to limit local property tax increases to 3.9 percent for each of the next three years.

“Property taxes are squeezing senior citizens and middle-class families,” Rep. Will Morgan, DFL-Burnsville, said in an e-mail highlighting the session’s achievements. “This plan will give them direct relief, and provide local governments the additional resources needed to provide the basic services residents rely on.”

Robling said the cap is fairly loose, with exceptions given for growing communities like those in Scott County and for public safety-related expenses, such as police officers and firefighters.

But while the city of Jordan will get an estimated $47,400 bump in local government aid and Scott County is expecting about $348,600 more; larger cities in Scott County, such as Savage, Prior Lake and Shakopee, don’t qualify for local government aid.

 Savage City Administrator Barry Stock said he disagrees with the levy limit because it violates local control. He would prefer the state not provide any aid, vs. meddle in local affairs.

“I’m always surprised that people in St. Paul (think they can) better manage (us) than our elected council members,” he said.

Because of the rise in the city’s fixed costs, the levy limit will impact Savage somewhat, but it will be manageable, he said.

Shakopee Finance Director Gregg Voxland told his City Council the limit won’t likely present an issue for Shakopee, partly due to the allowance legislators made for growing communities.  

Scott County is still in the early stages of developing its budget for next year and hasn’t had much discussion about the aid increase, said Kevin Ellsworth, the county’s chief financial officer.

“We’re happy to see it,” Ellsworth said. 

He said varying interpretations have been given about what the levy limit will mean for counties, and Scott County is still analyzing the impact.

Public schools were allotted an additional one-time payment of $51 per pupil unit. However, legislators plan for $30 of that to result in ongoing funding due to a dedication from the state’s school-trust land fund.

The $51 allotment will add another 1 percent to the 1 percent increase schools already expected to get this coming year.

The Legislature is also allowing districts to use some capital funds for general operating expenses on a one-time basis.

County project

With the biggest project of local note wrapped up, Scott County appeared to be in the clear as legislators prepared to leave St. Paul this month.

But funding for the county’s new regional public safety training center had to be rescued at the last minute when bond attorneys took issue with how the language was crafted.

Along with some other projects approved earlier in session, the center provision had to be reworked and added at the last minute to a secondary bonding bill passed as part of larger compromise agreement at the end of session, said Rep. Michael Beard, R-Shakopee.

The fix was the result of an atmosphere of give-and-take that occurred throughout session and helped legislators finish on time, with a balanced budget, leaving both sides of the political divide pretty happy.

Having established operating budgets during the first half of the legislative biennium, the main responsibility of lawmakers in this second session was passing a bonding package for public works projects. When the governor line-item vetoed parts of the first bonding bill passed earlier in the session, a compromise was reached at the end to fund remaining projects, notably the Central Corridor high-speed light-rail line, the formation of Lake Vermilion State Park and upgrades to the Minneapolis Veterans Home. 

State issues

Despite belonging to the minority party, Robling and Beard told Shakopee Chamber of Commerce members last week that many of the proposals they opposed were stopped, thanks to the veto power of a Republican governor.

“They gave up a lot — about $5 billion in proposed taxes,” Beard said, adding that a budget deficit helped restrain the growth of government. “Not a great deal of harm (was done).”

 “I didn’t come home and lose sleep over it,” Robling said of session.

Robling said she agreed with all of the governor’s vetoes except his opposition to staggered terms for Metropolitan Council members. 

She and Beard said they were pleased with market-orientated reforms made to health care, such as increasing the transparency for pricing.

Beard said a “womb to tomb” mega-health-care bill was originally proposed.

While the state will be adding an estimated 12,000 people to the state insurance program, it will also be providing tax credits to companies to encourage pre-tax accounts for medical expenses.

Morgan believes the new reforms will help small employers save money on healthcare and streamline the billing process to eliminate unnecessary waste.

“It is clear that the status quo on health care was not working — for families or businesses,” Morgan said an e-mail update about session.

In spite of all the wailing about budget difficulties, state spending still grew almost 10 percent this biennium, notes Rep. Mark Buesgens, R-Jordan.

Although a lot of politicians are patting themselves on the back because they didn’t go into overtime and they ended up with a balanced budget, “all we did is put a Band-Aid over a festering sore,” Buesgens said. “Next year there is going to be one huge problem.”

To close a nearly $1 billion budget hole this session, legislators tapped “anything that had a little money in it,” Robling said.

Besides making about $355 million in cuts, legislators added $100 million in new revenue by changing the corporate tax code, and tapped $500 million — about half — of the state’s budget reserves.

Using the savings account carries an element of risk, Robling said, because legislators are projected to face a $1 billion to $2 billion deficit when they return next year.

The reserves will need to be paid back if the state is to retain its good bond rating, Beard noted. He wishes legislators had done more to limit expenditures in future years.

There is no more savings account to dip into and every kind of accounting gimmick one can do with a straight face has been done, Buesgens said.

“Government spending — that’s the structural problem that has to get fixed,” he said. “You can say, ‘We all got along at the end of the day,’ but what people need to understand is the political leaders didn’t say, ‘Let’s solve the problem.’ They said, ‘Let’s put the problem off to next year’— and they all agreed to do that.”

Legislative fumbles

While legislators restrained themselves from using accounting shifts with school funding as they have in the past, they used a similar move with businesses to help solve the deficit.

For a month this summer, companies will have to pay 90 percent of their sales taxes early, instead of the typical 80 percent, Beard said.

Additionally, one of the pots of money used to balance the budget came from the state airport fund.

The $15 million hit could delay a number of projects and cause the loss of federal dollars. 

Legislators are talking about putting back the funding next year.

The removal wasn’t originally planned, and Beard noted that it was another example of a measure approved in the chaos of session, without proper vetting.

Shannon Fiecke can be reached at sfiecke@swpub.com.