5-5-2020 COVID-19 Update & Budget Projection from MN Governor Walz

MN Governor Walz to Provide Update on State’s Response to COVID-19, Budget Projection

Read the COVID-19 Update for 5-4-2020 Here

On Tuesday, May 5, 2020, Governor Tim Walz and Minnesota Management and Budget Commissioner Myron Frans, along with other state officials, will provide an update on the State’s response to COVID-19 and discuss the new budget projection.

This is a summary of the media briefing with reporters.

Update from Minnesota Management and Budget Commissioner Myron Frans:

• Two months ago, we released our Feb. forecast and our economy looked like it was in good shape. We had a surplus of $1.5 billion.
• Economic Conditions dramatically weakened, outlook remains volatile
  • Extraordinary situation requires this update
  • Inform policymakers as they make decisions about use of resources
  • Projection limited to current biennium
  • Major revenues and select expenditures have been updated
  • $2.426 billion projected deficit (before use of budget reserve)
• 
• The shock to the U.S. economy due to the pandemic is unprecedented
• The U.S. economic outlook will remain volatile and uncertain for some time
• 
• Minnesota wage income will likely decline 5.9% this year
• 
• Budget Projection Unknowns:
  • Path of pandemic
  • Consumer and business confidence
  • Business survival
  • Financial market volatility
  • Impact of fiscal and monetary policy
  • Federal support
  • Revenue delays
  • 14 months until end of FY 2020-21
• 
• Deficit Projected for Current Biennium: $2.426 billion
• 
• Budget reserve is $2.3 billion — the governor has the legal authority to use this reserve to balance the budget.
• Depleting these funds is difficult because we know that revenues are going to continue to decline.
• This recession will have an impact on the next biennium
• Funding Resources to Combat COVID-19
• 
• “We’re in a difficult time, but we will get through this together.”
• We don’t need to solve all of our budget problems by May 18.

Update from Governor Walz:

• The budget is going to be an ongoing project. It’s looking at the long-term horizon. There’s uncertainties as to how long this will last.
• Over the coming weeks, the data presented by the budget commissioner will drive some of the decisions they have to make. States cannot run deficits.
• Minnesota numbers on COVID-19 are still going to increase. We are not at the peak yet and there are some dark days ahead of us.
• Signing Executive Order 20-51, which allows doctors, dentists and veterinarians to go back in and do elective surgeries and procedures. That’s after completing a plan and complying with the requirements set by the Minnesota Department of Health.
• We believe that this move, with feedback and over 1,000 comments, specifically from a lot of health care providers and folks involved in this, we believe that we’re prepared to do it.
• This action is consistent with guidance from the CDC and the Centers for Medicare and Medicaid services as a temporary measure to ensure that PPE and ventilators were preserved for use for COVID-19 patients and they’ll be able to provide care. Fortunately we’ve been able to do that.
• Governor does want to note that Minnesota’s nurses and frontline health care personnel are nervous about this decision — but we have been in direct consultation with them. They are concerned that we do not over move towards this, depleting their supplies, or putting them in the frontline now where they feel like they don’t have the proper protective care.
• If people want to help prevent such a scenario from happening, please continue to social distance, wear a mask, and don’t go out if you’re sick. Following that advice means there’s one less potential person who’s going into the health care system and burning the PPE.
• With the decisions that have been made and the social distancing that Minnesotans have done, and the state’s “good handle” on what the PPE inventory is, that we’re able to resume the elective surgeries and procedures.
• This week is teacher appreciation week. If there were ever a year to have teacher appreciation week, this is it.

Update from Department of Health Commissioner Jan Malcolm:

• Globally, 3.6 million cases and 251,000 deaths
• In the U.S. 1.2 million cases and 69,000 deaths
• In MN, 7,851 cases and 455 deaths
• This disease is unpredictable and no one is immune from it
• 434 patients currently in the hospital and 182 in intensive care in Minnesota
• The five counties with the food processing plant outbreaks are still accounting for a majority of the new cases being reported. A quarter of the new cases are coming from those five counties: Nobles, Kandiyohi, Stearns, Cottonwood, and Martin.
• Executive Order 20-51 is intended to clarify and liberalize the requirements for providers to be able to provide elective surgeries and procedures that utilize PPE or ventilators. The original was all about that, it was about the preservation of ventilators and PPE, the guidance was always for providers to restrict procedures that used those important resources
• Because we know that we’re in an evolving epidemic and it’s taking us a while to reach peak, thanks to some of the community mitigation measures that we’re putting in place, and we have been saying for quite a while that we are concerned with the amount of procedures that we know are being foregone — care that should be sought that isn’t being sought. Both out of, perhaps a fear on the side of patients that our health care system might not be safe, and because providers were taking this guidance very literally and very cautiously in terms of preserving the PPE.
• As we have been building up those supplies, we believe that it’s time to give providers more freedom, more flexibility, but also more responsibility to strike that balance in a different way.
• The executive order lifts the restriction on elective procedures under the condition that health care providers have a plan for how they are going to monitor their PPE supplies, how they’re going to keep an eye on conserving enough of that supply to be able to respond to a surge in cases when they start to come. They need to have plans on how they’re going to screen patients, how they’re going to protect staff, how they’re going to keep track of PPE and how they’re going to collaborate with each other when it comes to looking at what the region might need or how they might need to share across their different provider organizations.
• This is intended to give providers the ability to make those decisions
• Health care providers don’t have to file their plans with the MDH for approval, but they need to have them.

Additional notes from the media briefing:

•  Governor received a question about whether there could be layoffs of state employees. He said “we have to leave everything on the table.” The next wave of unemployment could be state, local and county officials.
• Governor says Minnesota is good with unemployment funds until October.
• Governor says he’s concerned the budget deficit could grow even larger, but it would be smart to take a conservative approach.
• Governor says there is a false belief that we are past the worst of COVID-19. We are not. As a nation, our peak is still coming.
• Governor says he is “deeply concerned” about local budgets. He says it’s the state’s responsibility to figure out how to be partners with them, with regards to LGA payments and federal funding.
• Governor received a question about delays in PPE and whether he’s concerned about that now that elective surgeries are going to resume. The governor said, the reality is that supply chains are still incredibly tight, and supplies for testing and PPE are still very competitive amongst states and nations. Until those supplies are in the warehouse, there is concern. But locally, we have reliable suppliers who have strengthened the supply chains. We’re asking individual health care providers to monitor their supplies very closely.
• When asked if there could be a budget-cutting special session, the governor said that anything is possible. Governor said is is “more than likely” that the legislature should be prepared for that to happen.
• Commissioner Malcolm says the hospital capacity in rural areas where outbreaks are growing seem to be holding, but if capacity does get strained, there is a backup system in place to find the proper care for those patients to get them where they need to go.
• For businesses that are defying the governor’s order, Gov. Walz says “I’ve said all along that this is going to take social compliance…” He added that he’s trying to get those businesses (like salons and barber shops) open as fast as possible.

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