May 31

Written by:
5/31/2011 8:44 AM 

Scope of Shutdown

In 2005, the last shutdown, we had a Republican Governor who did not want a shutdown and a Democratic legislature who wanted to “embarrass” the Governor. As a result, the Governor wanted to minimize the impact of the shutdown as much as possible, and several parts of state government were still open for business because only a few of the major budget bills were not signed into law. The scope of what was deemed “essential” and not subject to a shutdown was as wide as the judge would allow. While the Association filed legal papers claiming Medicaid payments for long-term care needed to be named an essential service, it was a relatively easy argument to make. So, there were a few minor inconveniences for the eight days of the partial government shut-down back then, but most Minnesotans didn’t notice anything different, with the exception of the state employees.

Fast forward to 2011. Governor Dayton wanted to get agreement on his “compromise” level of increased spending and reductions to balance the budget—he didn’t get that agreement, so he made good on his word and vetoed all spending bills, with the exception of the agriculture department. While revenues will continue to come in absent a budget agreement, the money coming in is still less than the current law expenditures, there is no budget reserve account to “tap” for unanticipated expenses, and there is no authority to spend the money coming in. Article XI, Section 1 of the Minnesota Constitution states: "No money shall be paid out of the treasury of this state except in pursuance of an appropriation by law."

There are no appropriations for education, including payments to the University of Minnesota and the Minnesota State Colleges and Universities System; health and human services, including payments to nursing homes, waivered services, hospitals, clinics and patients; transportation, including construction workers; the environment, including state parks' budgets; public safety, including the State Patrol and state prisons; and state government, including the roughly 34,000 people who work for the state. We can assume that upcoming Court rulings will allow governments to continue making payments for costs essential to life and safety. In general, those include such costs as prison guards, police, and reimbursements for emergency medical care. Aggravating but not dangerous effects, such as closures of state parks (over the July 4th weekend) and halting of construction projects, would not be protected as essential services.

State Employees

Another significant change between 2005 and 2011 is the changed state employee agreement between the state and the unions. Sans a signed budget agreement, layoff notices to all non-essential state employees will need to be issued soon after July 1, 2011. Once the layoffs begin in early July, the state needs to come up with a significant amount of money to “make good” on the contractual obligations tied to layoffs—all accrued vacation and 40% of all accrued sick time must be paid out in lump-sum payments. This could cost the state hundreds of millions of dollars. And we may not have the cash available to make these payments.

Distance Between “Camps”

Another difference is the stage of negotiations. Here are a few snippets from Governor Dayton and the Republican Legislature and you can be the judge on whether they are close to an agreement:

Governor Dayton: “Each of us started our budget proposals by making a choice. I chose a balanced approach to our budget; one that included both significant cuts, but asked the top two percent of Minnesotans to pay more to ensure our quality of life and the services millions of Minnesotans depend on. My approach chooses not to balance the budget on the backs of the other ninety-eight percent of Minnesotans. In the spirit of compromise, more than one week ago, I cut my proposal in half, in the hopes that an offer to meet in the middle would spur action towards the balanced solution the people of Minnesota have asked for. Instead, you chose to present me with an all-cuts approach, one that has serious consequences for Minnesotans, and that I do not believe is in line with our shared commitment to build a better Minnesota.”

Republican Legislative leaders: “Governor Dayton's budget equals a 22% increase in state spending. Most would readily admit this size of increase in state spending is unsustainable. Governor Dayton's budget request would require significant tax increases, giving Minnesota the uncompetitive distinction of having the 2nd highest tax rate in the Nation. The $34 billion budget we support amounts to a 6% increase over state and one-time federal stimulus spending in the current budget (FY 10-11). We believe this 6% increase in government spending provides state government with the revenue needed to fund vital programs and the services our citizens rely upon. We have already compromised. We came into this session believing we had about $30 billion to spend. We found and agreed to almost $4 billion more spending, and invested in Minnesota’s priorities: education, health care, the elderly and vulnerable, and core services such as public safety.

Low Hanging Fruit

A final difference between 2005 shutdown and 2011 shutdown is the “low hanging fruit” availability, or the “easy” ways to find new revenue. During the past six years we have shifted payments from one biennium to the next more than once; found “fees” that resulted in significant increases to various goods and services; and moved some financial obligations to local units of government. State demographer Tom Stinson, not known for his energetic presentations, does, on occasion, make statements that are memorable and quote-worthy. On May 26th he was doing a presentation entitled “Minnesota and the New Normal” and one of his statements was: “If one-time money is kicking the can down the road, Minnesota’s budget is currently in a cul de sac.” In other words, there isn’t any available “batch” of one-time funds to shift to fix the structural deficit in our state’s budget.

Rhetoric during the legislative session has not changed, and as lawmakers look toward a special session to finish the budget at some point this summer or fall, the talk remains the same. Who would have thought “compromise” was going to be a dirty word? While Governor Dayton’s messages have included pleas for compromise (“Compromise is never easy, because each person must give up something that is important. Compromise requires us to agree to items that we don’t agree with. That is the only way we will reconcile our differences on the state’s budget.”), many Republican legislators claim they have already compromised as far as they can go.

So, What Happens Now?

The Governor won’t be calling legislators back for a special session until there is a budget deal negotiated—it makes no sense for the citizens of Minnesota to pay for legislators to come back into session and sit there collecting per diem payments while repeating the same polarizing speeches. And, if the sides don’t start moving closer together soon, not only will we have government shut down on July 1, 2011, with the closure of various government services (think state parks and rest stops during peak holiday travel) we may run out of money to pay for some of the essential services. And, heaven forbid they can’t agree until the fall—explain why to the tens of thousands of incoming college freshmen who will have to stay at home waiting for a balanced budget before school can start!

Minnesotans will need to step up now and tell their legislators what they think about this past session, where a record number of bills were passed and signed into law—a record for how few new laws were passed, not how many! Minnesotans need to repeat the messages from the last election season—they voted in their legislators and the Governor to get the job done. Getting the job done means individual legislators and the Governor need to move away from a hard-line position. It means the public finger-pointing and blame the “other guy” needs to end. Folks were elected not just to represent the “everyday folks” in their district; they were collectively elected to serve the state of Minnesota and the public good. Tell them that.
 

Copyright ©2011 Patti