Economic development supports take a hit in conference committee agreement

The House and Senate have agreed to $30 million in cuts to state funding for economic development, job training and affordable housing – investments that are important to helping stabilize families and expand the state’s economy during this slow recovery. The jobs and economic development conference committee agreement has passed off the House and Senate floors and is on its way to Governor Dayton.

The conference agreement significantly restructures how economic and workforce development grants will be awarded by creating a competitive funding pool. These grants, administered by the Department of Employment and Economic Development, fund a variety of services – such as job training, career planning, business development and financial education. These services benefit a variety of disadvantaged and disabled people, as well as young people just entering the job market. In FY 2012, the conference agreement reduces funding for grants that are currently being awarded to specific nonprofit service providers. Beginning in FY 2013, these grants for job training services would be converted into a competitive grant pool and the overall amount of funding reduced.

Some job training services for individuals with disabilities would remain outside of the competitive grant process, including the extended employment program, which helps people with significant disabilities to maintain and advance in their employment. The conference agreement increases funding for both Vocational Rehabilitation Services, which provide employment services for people with significant disabilities, and State Services for the Blind, which helps Minnesotans who are blind, visually impaired or Deafblind with their employment skills. This increased funding would allow the state to draw down additional federal matching funds.

The conference agreement included some good news for affordable housing: a $2 million increase in base funding for the Housing Trust Fund that will preserve 150 rental assistance opportunities. However, there is still a seven percent overall cut to the Minnesota Housing Finance Agency that will impact efforts to preserve and rehabilitate affordable housing units.

More than half of the general fund savings in this conference agreement comes in the form of transferring more than $16 million in available funds from various Unemployment Insurance accounts. Originally, the House and Senate jobs and economic development bills also proposed a controversial transfer from the Douglas Johnson Economic Protection Fund, which is funded by payments from mining companies and used to respond to economic development and job creation opportunities on the Iron Range. That proposal has been moved into the tax conference committee, where $60 million is transferred from the fund to help reduce the general fund deficit. 

Although the conference agreement adopts some of Governor Dayton’s positions, the Governor and legislature remain $27 million apart.

-Scott Russell

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