Attorney Peter Nelson made a valuable contribution to Minnesota's unallotment discussion in his March 26 MinnPost Community Voices article, regarding the Minnesota Supreme Court's hearing in the "Brayton case" -- the second unallotment case filed. I am the plaintiff in the first case: Carney v. State of Minnesota. (I was dismissed in the District Court -- my case is currently in the Court of Appeals, and I have petitioned for accelerated Supreme Court review.)

Nelson cites two sections of Minnesota Statutes. We'll use Justice Lorie Gildia's names for them: paragraph (a) and paragraph (b) (three phrases are emphasized):

16A.152 Subdivision. 4. Reduction.

paragraph (a)

• If the commissioner determines that probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the biennium will be less than needed, the commissioner shall, with the approval of the governor, and after consulting the Legislative Advisory Commission, reduce the amount in the budget reserve account as needed to balance expenditures with revenue.

paragraph (b)

• An additional deficit shall, with the approval of the governor, and after consulting the legislative advisory commission, be made up by reducing unexpended allotments of any prior appropriation or transfer. Notwithstanding any other law to the contrary, the commissioner is empowered to defer or suspend prior statutorily created obligations which would prevent effecting such reductions.

Nelson's argument (briefly stated) is this: There was no money in the budget reserve account when the current budget biennium started (it was spent in the previous biennium; no appropriation was made for this biennium.) Therefore, we must proceed to paragraph (b) – Gov. Pawlenty claims this paragraph authorizes his unallotments.

Plaintiffs in both cases argue probable receipts were not "less than anticipated" -- the June 2009 unallotments were, in fact, based on the February 2009 forecast. Plaintiffs also claim "the remainder of the biennium" means less than 100 percent; the Pawlenty administration argues "remainder" can be 100 percent. Nelson argues that these restrictive phrases operate only with reference to the budget reserve -- not unallotment power. Nelson suggests Justice Gildea was thinking along this line when she asked:

• "Is it the state's position that that paragraph is relevant here? As I understand it we're not talking about the budget reserve account, that was already gone; we're talking about unallotments under paragraph (b). What is the state's position about whether the language in paragraph (a) informs this Court's construction of the language in paragraph (b)?"

Nelson is right to distinguish these two paragraphs -- they do define a two-step, sequential process. However, the administration didn't advance Nelson's argument. As we'll see, I think it  had good reason not to. But before analyzing Nelson's argument (and flipping his conclusion), two additional points merit consideration.

Point 1: Unallotment is designed to rebalance budgets that start in balance

I argued in District Court:

• An analysis of the unallotment statute establishes the clear intent of the legislature that this process is a kind of "mid course correction" or "safety valve" for budgets that begin in balance, but become unbalanced through revenues that are less than expected."

Historically this is how unallotment has always been used. No previous unallotment was ever done less than ten months into a biennium.

The 2009 unallotments are unprecedented in two additional ways:

• This is the first time unallotment has been used in two consecutive bienniums.
• This is the first time we started a biennium with an unbalanced budget -- following Governor Pawlenty's veto of a budget balancing revenue bill.

Point 2: Unallotment is only one of three ways to correct unbalanced budgets.

We all know about the second way -- a legislative session -- including the option of a special session. But legislatures and governors can deadlock.

The Pawlenty administration presents unallotment as necessary to ensure Minnesota doesn't become "another California." Not true ... there is a little known but crucial third way -- as stated to the Minnesota Supreme Court in my petition for accelerated review (some citations are omitted):

"[In Brayton] the Pawlenty administration asserts:

"'The Minnesota Constitution does not permit the State's biennial budget to remain in deficit. The Governor and Legislature were previously unable to reach agreement on how to resolve the $2.7 billion budget deficit. Under the district court's reasoning, in the absence of such an agreement, spending pursuant to the biennium's appropriation bills will continue until such time as the State simply runs out of money before the biennium ends, resulting in a government shutdown, at least as to non-core functions.'

"Appellant [Carney] has researched these claims, which are made by the same counsel in both cases. Appellant [Carney] has concluded that this Court has been badly misled by the Pawlenty Administration's brief in Brayton. The Minnesota Constitution, Art. XI § 6 provides for the ability to "roll over" Certificates of Indebtedness for up to 17 months in the event of a biennium that ends with a deficit. The Constitution further requires that if all Certificates -- current and "rolled over" -- cannot be paid in full with money in a fund on December 1st, five months after the end of the biennium, the State Auditor is required to levy a statewide property tax to fully retire all the Certificates within one year. These Constitutional provisions are given effect in Minn. Stat. § 16A.671, which allows, but does not require, the Commissioner of Minnesota Management and Budget to "roll over" the certificates as described. It appears that in the event of a biennial deficit, a Governor might refuse to "roll over" the Certificates. But this would be part of the political process of give and take -- a Governor's choice -- not a Constitutional mandate. In any case, the Minnesota Constitution does mandate the retirement of any biennial deficit. The crucial point for the Court to bear in mind here is that Minnesota is in no danger of "becoming another California", or of the necessity of a government shutdown if there is a deficit at the end of a biennium. In short, Minnesota's unallotment law is a convenience, but not a necessity -- the Court should properly view it as such."

I've spoken with Rep. Marty Seifert, Sen. Larry Pogemiller, and legislative staff about these provisions -- they all know about this.

Now briefly to Nelson's argument.

First, both (a) our Minnesota statutory budget and unallotment scheme taken as a whole, and (b) the entire history of its use, demonstrate that unallotment is a way to make "mid course" corrections when a budget becomes unbalanced due to an economic downturn. Unallotment was never designed or intended to manage chronic and structural deficits. Let me be blunt: It is simply dishonest to deny this.

Beyond this important question of intent, I mentioned earlier that I thought the Pawlenty administration, and its very able legal counsel, may have had good reason for not advancing Nelson's argument. Here it comes: What about the sequential character of the two paragraphs -- and in particular, what about the third phrase I highlighted, in paragraph (b): "an additional deficit"?

The Pawlenty administration has already argued that "probable receipts for the general fund will be less than anticipated" (never mind that their June 2009 unallotment numbers were based on the February 2009 forecast), and that "remainder" can mean 100 percent. That two-story house of cards might possibly stand -- if we all take shallow breaths and think shallow thoughts (I refuse!). However, if the Pawlenty administration had advanced Nelson's argument, it would have to add a third floor to the card house: "additional" must now mean 100 percent -- additional to nothing. Because -- after all -- the budget reserve pantry was bare, and is bare! And an attic: paragraph (b) is part of a sequential process -- the provisions of paragraph (b) cannot operate because the paragraph (a) prerequisite -- first spending an existing budget reserve -- cannot be done.

Therefore, if Minnesota ends a biennium with no budget reserve, and amid an economic downturn, we have only two corrective options heading into the new biennium:

(1) Legislative action, (via regular or special session), or,

(2) a possible biennial deficit, which must be either corrected within five months, or eliminated with a one-time property tax levy -- something Minnesota voters will not soon forget! (As noted, the governor can refuse to "roll over" certificates -- voters will remember that too!)

Nelson, by the logic of his position, has demonstrated for us that under our present circumstances unallotment is not an option at all.

And doesn't this all make sense? We need to hold the Legislature accountable for facing up to our chronic and structural budget problem. Unallotment is a convenience ... a band-aid -- our situation is chronic and much more serious. The governor can't do the Legislature's dirty work for it, and shouldn't try.

Postscript: Nelson suggests that if his reading is correct, "the governor should get an easy pass on whether he violated the statute." Whoa! There are additional statutory and constitutional questions in the Brayton case and my case.

Bob Carney Jr. is a Republican candidate for governor of Minnesota.