State contractors beware: shutdown = no payments

State contractors were put on notice today: If the governor and Legislature don’t agree to a budget and there’s a state shutdown July 1, contracts and payments will be suspended.

But at least the work is appreciated.

The news came in a notice, signed by Spencer Cronk, administration commissioner, and published today in the State Register:

This is a notice to contractors, vendors and grantees that have contractual relationships with the State of Minnesota. It concerns both current contracts with an expiration date after June 30, 2011, as well as any new contracts that are to become effective on or after July 1, 2011.

The State of Minnesota operates on a biennial budget. Funds are appropriated by the Minnesota Legislature every two years, with each fiscal year beginning on July 1 and ending on June 30 of the following calendar year. Our current biennial budget is due to end after June 30, 2011.

The Minnesota State Legislature adjourned on May 23, 2011. With the exception of funding for the Minnesota Department of Agriculture, no agreement has been reached between the governor and the legislature regarding funding for the biennium beginning July 1, 2011. As of this time, the executive branch of the State of Minnesota is preparing contingency plans in the event of a possible shutdown of state government commencing July 1, 2011.

In the absence of legislation specifically appropriating funds for the continuing operations of the State of Minnesota for the next biennium, state authority to expend or release funds to pay for goods or services will be limited after June 30, 2011. Details of those critical services that may continue to operate on an emergency basis after July 1, 2011 have yet to be determined.

Although it is possible that agreement on a budget will be reached in time to avoid a disruption in state operations, the state must advise all contractors, vendors and grantees that in the absence of legislatively authorized appropriations as of July 1, 2011, work activity under the contracts as of that date must be suspended, pending authorized appropriations, as will all payments required of the State of Minnesota under those contracts.

Please note that the State is not invoking cancellation or termination clauses in State contracts at this time. The State is simply providing notice to contractors, vendors and grantees that a suspension of work and payments may occur after July 1, 2011. If cancellation or termination of contracts becomes necessary as circumstances change, the affected parties would be contacted directly by the State.

We sincerely appreciate the work you do with and on behalf of the State of Minnesota and recognize the difficulties that the potential shutdown could cause for you.

We will make every effort to provide timely information as matters progress and also suggest that you monitor the Department’s Materials Management Division web site (www.mmd.admin.state.mn.us) and media reports for developments.

Spencer Cronk, Commissioner

Department of Administration

State of Minnesota

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Comments (4)

  1. Submitted by David Greene on 05/31/2011 - 04:26 pm.

    More job creation by the Republicans.

  2. Submitted by Barb Yates on 05/31/2011 - 07:50 pm.

    Yes, many of these contracts are held by the private sector– and yes, those contracts do impact jobs in the private sector.

  3. Submitted by will lynott on 05/31/2011 - 10:37 pm.

    Well, yes, but they have PRINCIPLES–so, who cares?

  4. Submitted by Greg Kapphahn on 06/01/2011 - 09:04 am.

    I suppose it’s only fair that the private contractors who largely supported the Tim Pawlenty approach of avoiding necessary tax increases by withholding payments from the state’s school districts with the promise that they would be paid that money “later,”

    a promise now being converted into a lie by our Republican legislators (by which they have rendered themselves AND former Gov. Pawlenty to be the LIARS we always knew they were),…

    Should now find themselves benefiting from that same approach.

    No doubt they’ll do what the school districts HAD to do – borrow massively in order to keep providing the services they were required by law to provide.

    I’m completely convinced that the “private sector” will just keep chugging along, providing goods and services to the state government based on the promise that they’ll be paid for what they’re providing “someday.”

    Next year,…

    Or the year after that,…

    Or the year after that,…

    Or NEVER.

    They certainly expected the school districts to provide services without compensation. Why shouldn’t they now hold themselves to the same standard?

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