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Minnesota ranks 47thamong states in totalfederal expenditures as apercent of state GDP (FY2009)

MINNESOTAS EXPOSURETO FEDERAL

FUNDSIS LOWERTHAN MOST STATES

23%24%

18%

10%12%

14%

16%

18%

20%22%

24%

26%

U.S. Average Midwest

Average

Minnesota

Federal Expenditures as a

Percent of State GDP

Source: FFIS FY 2009

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MINNESOTA RANKS 49TH AMONG STATESIN

PER CAPITA FEDERAL EXPENDITURES

Source: FFIS State Policy Report, October 2011

0

2,000

4,000

6,000

8,000

10,000

12,000

Total DirectPayments

Grants Procurement Salaries

US MN$ Per Capita

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29% of the FY2012-13 budget

$9.8 billion federal funds in FY 2011

$5.5 B Medicaid

$1.0 B Education$0.8 B Transportation

$2.5 B grant funds across state government (Health and

Human Services, Economic and Community

Development, Public Safety)

Approximately 10% (3,143) of the states full-time

equivalents are federally funded (FY 2012)

FEDERAL FUNDSIN STATE BUDGET

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Many unknowns remain

Base on which reductions are made and

corresponding percentage reduction

Timing of reductions (FY 12, 13, 14?) Wont really know until January 2013 or later

Potential $117 million reduction in programs subject to

sequestration (FFIS estimate)

Overall, MNs federal funding expected to decrease by1% compared to FY 2012 (FFIS estimate)

Based on Continuing Appropriation

Largest federal-state partnerships are exempt (e.g.

Medicaid, transportation, and TANF)

HOW WILL MN FAREOVERALL?

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10Joe Heller / Green Bay Press Gazette, Politicalcartoons.com

THE FISCAL CLIFF MAYBEA BIGGER PROBLEM

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Payroll tax cut expires ------------ $110B

Bush tax cut expires -------------- 160B

AMT Indexing expires ------------ 125B

Other changing tax provisions -- 146B

Total tax increases $541B

Scheduled spending cuts $144BTOTAL (Fiscal Drag) $685B

THE FISCAL CLIFF IS EXPIRING TAX POLICY,

NEW TAX POLICYAND SPENDING CUTS

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THE FISCAL CLIFF WILL CREATE UNCERTAINTY

IN OUR NEXT ECONOMIC FORECAST

2.1

0.5

0.1

-0.3

4.4

-1

0

1

2

3

4

5Projected Growth Rate - 2013 Real GDP

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FY 2014-15 BUDGET PLANNING

($ in millions) FY 2012-13 FY 2014-15$

Difference%

Change

Forecast Revenues 33,867 35,861 1,994 5.9%

Projected Spending 34,160 36,909 2,749 8.0%

Difference (Gap) (293) (1,048)

Inflation 1,059

School Shift 2,436

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Treasury Secretary Timothy Geithner

THIS (THEFISCALCLIFF) WILLBEABIGTESTOFTHECAPACITYOFTHIS

COUNTRYTOGOVERNITSELF