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Many eyes watch budget process

ST. PAUL - A late 2005 report showed Minnesota state computers were vulnerable to hackers.

The auditor suggested the state give those who manage the computers more money.

Those words did not fall on deaf ears. When state officials began an every-other-year budget process last year, the topic returned. Gov. Tim Pawlenty announced his budget plan last month, highlighting a proposal to spend $213 million on technology upgrades, in large part to improve security.

Legislative committees are beginning to look at that and other spending suggestions as lawmakers have until May to draw up what Pawlenty wants to be a $34.4 billion, two-year budget.

To most Minnesotans, the budgeting process is a mystery. But in many ways, it is the most important thing state government does because without money, the state can do little.

The first mystery may be the budget's timing. If a family draws up a budget, it generally is for one year and starts Jan. 1. The state's budget is not that simple.

Like many governments, state budget years - known as fiscal years - start on July 1. And in Minnesota, a budget lasts two years (known as a biennium).

State agencies always are thinking budgets, but the Pawlenty administration got serious in July when the governor's staff met with about 150 agency heads and their budget chiefs.

With such a big budget, many items don't get high-level consideration. "You focus on the top $3 billion or $4 billion," Finance Commissioner Tom Hanson said.

With big budget items, such as education and health and human services "we will have multiple meetings," Hanson said.

The administration needs to decide how much money to spend on each issue, such as the computer security matter.

"Do you want the Cadillac version, the good sedan version or the Yugo version?" State Budget Director Jim Schowalter said is the decision to be made.

In the computer matter, officials opted for a Cadillac, he said.

State officials don't start from scratch on a budget.

The governor's staff is guided by a late-November "budget forecast," a report that estimates how much money the state will have to spend. It combines an economic outlook with reports on how revenues such as taxes are coming into the state.

Armed with that information, the governor-led team can decide how much it wants to spend, and, thus, raise in revenue.

In Pawlenty's case, he decided on a $34.4 billion budget plan, a 9.3 percent increase from the current budget. Most of the increase is funded by higher revenues fueled by a better economy, although some fee increases are included.

The $34.4 billion only represents the General Fund budget, which the state can control. The total budget will be closer to $51 billion, the difference being things such as federal programs that pass through the state, but state policymakers don't control.

Law gives the governor a January deadline to submit his budget to legislators. Lawmakers look it over for a month and a half until receiving a financial update in late February.

In the meantime, legislative committees hear testimony from most agencies to learn their needs.

Once the February budget forecast is released, legislators hammer out their own budget proposals, but they are based on what the governor already presented. (The governor's administration has many more people than the Legislature available to work on the budget.)

Then legislative budget committees begin discussing their proposals and compare them with what the governor wants, often bringing in dozens of witnesses ranging from state officials to regular citizens.

Committees primarily hear proposals for parts of the budget they control. For instance, the computer security issue probably would be debated in state government funding committees, and since colleges have some technology challenges it could be heard by higher education committees, too.

Generally, spending proposals are grouped into a half-dozen or more so-called "omnibus bills" that bundle similar spending provisions.

House and Senate leaders promise to agree by April 27 how much will be spent in each general part of the budget - education, natural resources, health and so on.

Once House and Senate committees finish similar bills, they receive votes by the full House and Senate. Since the bills seldom are identical, they land in a conference committee to work out the differences.

When a conference committee reaches an agreement, the bill returns to the full House and Senate where lawmakers may either approve or reject the panel's product; it may not be amended. If lawmakers don't like it, the budget bill may return to a conference committee for further negotiations.

After both chambers agree on a subject area's budget, it goes to the governor, who may sign it or veto it. He also may veto parts of a budget bill. If it has not adjourned for the year, the Legislature may attempt to overturn a governor's veto.

The budget becomes effective on July 1, although next year's Legislature can make changes.

The original budget and changes all are examined by many people of many political persuasions at many levels in state government.

"You would be shocked at how much people care," Schowalter said. "It is not a trivial decision."

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.