Appropriate Away: It's State Budget Time

Every biennium, our elected officials go through the super fun, uncomplicated process of determining Minnesota’s budget. It starts with the governor’s recommendations, and then the legislature forms its own budget to levy taxes and appropriate money to state entities and organizations doing the important work of making Minnesota a great place to live. Although anything and everything’s up in the air until the budget passes before the end of the session in May, here’s the quick and dirty to impress your policy-minded friends and colleagues.

main.jpgBudget appropriations – cuts, flat or increases

The last few budget cycles decreased appropriations for nonprofit programs or organizations that make grants to nonprofits. With a bit cheerier budget projection, Gov. Dayton’s recommendations are largely flat or even slight increases for appropriations to many organizations. Education programs, from early childhood education to K-12 to higher education, are seeing substantial recommended investments in the Dayton budget. The Senate and House DFL proposal, however, cuts $150 million dollars from the health and human services budget , much to the chagrin of some legislators and health organizations. We also may get a $750 million dollar bonding bill out of this session, which could include bonding for new public works buildings or expansions.

Tax code reform

Tax reform: one of the only things more rare than a new David Bowie album. Gov. Dayton’s original budget included an increase on business-to-business taxes for things such as legal and accounting services. It caused a bit of an uproar, with business owners saying those tax increases would be passed on to their customers (including you, nonprofits). These proposed increases have been dropped in the governor’s updated budget released last week, in addition to other tax code reforms such as equalizing the sales tax and taxes on consumer products like clothing.

Raising taxes on top earners

Although business-to-business taxes were dropped, Dayton’s revised budget still includes an income tax increase on the top 2% of Minnesotans. While you and I and our other nonprofit brethren are most likely not in that 2%, we have to admit we may know some people who are. And those people may give money to our organizations.  Like it or not, a tax increase on top earners may mean fewer donations to the causes you and I care about (and are employed by). The other side of tax increases, however, is this is how the state is going to pay for your appropriation increase or new bonding project.

Snowbird tax

If your development department is anything like mine, you’ve heard about the snowbird tax from your snowbird donors. This reform changes the amount of time non-residents can live in Minnesota and not pay income tax, dropping it from six months to two months. Snowbirds argue this encourages them to spend less time in Minnesota, which incidentally weakens the ties they have to Minnesota and our many nonprofits. Logic withstanding, some donors are considering cutting all support to Minnesota nonprofits out of spite of the tax change. However, tell your worried snowbirds this: even Governor Dayton doesn’t think it’s going to make it into the final budget.

So what can I do?

  • Educate yourself on the proposed budget. Minnesota Council of Nonprofits has a 2013 policy agenda about how these proposed changes impact nonprofits, and offers a free webinar on the state budget on March 27.
  • Come to How to move a mountain: Motivating people to effect big change on March 28. Learn from your YNPN peers about how they’ve built successful coalitions and made an impact.
  • Check with your government relations/policy/advocacy colleagues to see if there are important issues for your specific industry, or if you live in a key legislator’s district – that’s gold, since again, constituent input can be the foundation or tipping point for a legislator’s position.
  • Any politician worth their salt wants to hear from their constituents. So tell them what you think about the budget and how your money and your neighbor’s money and my money should be spent. Word to the wise: always speak for yourself, not on behalf of your organization. You don’t want to throw a mixed-message policy wrench into the legislative plans of your hard-working government affairs colleagues.

The budget proposal is still just that – a proposal.  And in the slightly altered words of Yogi Berra, “It ain’t over till it’s over [in May at the end of the session and the state budget passes].”

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