Within the month, Gov. Tim Pawlenty is headed to a place no Minnesota governor has gone before. He’s going to unilaterally balance the state budget by executive decree, using a process known as unallotment.
On paper, the process is simple. He’s going to subtract more than $3 billion from spending bills he’s already signed to bring the state’s 2010-11 budget into balance with expected revenues at $31.4 billion.
On one hand, it doesn’t seem so difficult.
Pawlenty is expected to get half of the balancing job done by using accounting shifts that will delay when schools get their K-12 funding. In addition, he’s already started the budget-cutting process by using line-item vetoes to trim $400 million.
That leaves between $1 billion and $1.3 billion to be cut through unallotment for the new biennium, which begins July 1.
Some wiggle room in unallotment plan
Pawlenty’s plan actually would use a tactic that provides a fair amount of wiggle room for both the governor and legislators — by making most of the cuts from the second year of the budget.
By then, two things could happen that would take some of the pressure off of Pawlenty’s decisions: One, the economy could improve, bringing more revenue into state coffers and allowing some of the cuts to be restored. Two, even without substantially new revenue, the Legislature next session could decide to restore some of the governor’s cuts by making other tweaks to adjust the budget.
On numerous occasions, the governor has said that state government needs to tighten its belt, just like nearly everyone else in Minnesota has had to do in “the toughest economic times since World War II.”
But what makes this task tougher than it may appear is that the much-maligned Legislature did hold the line on spending. The budget it proposed — including $1 billion in new taxes — would have been little different from the 2008-2009 budget.
By twice rejecting the legislative plan, the governor actually is shrinking state government. For the first time in state history, the new budget will be SMALLER than the $33.9 billion biennial budget that preceded it.
This is good political rhetoric for a man who appears to have national ambitions. “Look at me,” he will be able to tell the conservative base of his party. “I SHRANK GOVERNMENT.”
But Pawlenty, a consummate pol, understands that such a boast would come with risks. It is one thing to talk tough about cracking down on spending and tossing a few people who live under bridges off “welfare.” But it is another to be the person responsible for shutting down hospitals on Main Street, Minnesota. It is one thing to talk about belt tightening. It is another to be the governor when a state university and community college system has skyrocketing tuition costs.
There are real people behind those huge numbers. DFLers — and any number of interest groups ranging from hospital administrators to mayors of towns of all sizes — are predicting doom, gloom and substantial job losses by the time the governor is done.
The governor continually has pooh-poohed the dire talk as “overstatement.”
Some expecting lawsuits challenging Pawlenty unallotment
Additionally, Pawlenty almost certainly will face a lawsuit or two before this process is done.
Those suits are expected to come from interested parties — hospital or education associations or labor groups — out to test the constitutional authority of the way Pawlenty intends to use unallotment. Although the process has been allowed since 1939, this will be only the fifth time that it has been used — the third time, though, by Pawlenty. (Rudy Perpich and Al Quie were the other two governors to use the device.)
But Pawlenty’s plan this year is a hugely different use of the tool both in timing and magnitude. In all other cases, unallotment was used as a last-gasp tool to balance the budget in the second half of the second year of the biennium. This time, though, the governor is starting on the front end. Also, the planned cuts are 10 times larger in scale than any previous unallotment.
What started as a threat a few days before the end of the legislative session — “there will be no special session, no government shutdown, no increase in taxes” — has become a reality. He’s on the verge of doing what he said he’d do. He’s balancing the budget by himself.
“I would say it is likely that some group will file a lawsuit,” House Speaker Margaret Anderson Kelliher predicted in an interview with MinnPost.
The basis of the suit? Kelliher was vague on specifics but suggested there are potential “separation of powers” issues about the unallotment law and the governor’s planned actions.
The budget is, after all, supposed to be a product of the Legislature and the governor. State statute says the governor, working through the finance commissioner, “shall use” unallotment when “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.”
DFL legislators like to point out that there was nothing unanticipated about this shortfall. The governor signed virtually all of the DFL spending bills but vetoed the revenue bills that would have covered the costs, in effect unilaterally creating the “imbalance.”
So here we are.
Legislative commission has limited role
Start with the process and the key dates: The new biennium begins July 1. A committee, the Legislative Advisory Commission, made up of legislators from House and Senate tax and finance committees, must meet and be informed by the finance commissioner, Tom Hanson, of the cuts the governor plans.
But this committee is without power and is only consultative.
In the period between when the cuts are announced and when they actually take effect, Kelliher said the commission may well schedule public hearings to discuss the impact of the unallotments. But all members can do is talk and listen — and make their case to the public.
Kelliher — and other DFL leaders — continue to believe that when Minnesotans hear the impact of the deep cuts, they will all but storm the Capitol. She also thinks that many people will be upset when they correlate expected cuts in local government aid with almost-certain increases in their property tax bills.
“Minnesotans get that there needs to be shared sacrifice in balancing the budget,” she said. “They get that you need to have a pay-as-you-go approach to managing government. They get that there will be real pain caused by these cuts.”
Maybe, maybe not. For the most part, Pawlenty so far seems to be getting higher marks than the Legislature in terms of the correct solution for balancing the budget.
Unallotment law details not that clear
All of this is happening in a surprisingly foggy environment.
The nonpartisan House research department compiled a 14-page brief (PDF) about the workings of the process. What’s most striking is the number of times the document uses the phrase “the law is not clear” about what the governor can actually do.
For example, he apparently can unallot some funding for constitutional offices, such as the attorney general’s office. But he apparently cannot unallot appropriations for the courts or the Legislature or for the payment of unemployment benefits.
One thing is clear: Although many states grant governors some unallotment powers, few states seem to give so much power to the chief executive as Minnesota does.
One other thing is clear: Watch for the Legislature to do some “unalloting” of its own next session by trying to rewrite the statutes in such a way as to reel in the governor’s super-unalloting powers.
“I suspect that [gubernatorial powers] will be visited next year,” Kelliher said Thursday.
Under current law, for example, the governor, through his commissioner of finance, is required only to consult with the legislative committee.
Legislature will try to rein in Pawlenty next session
Watch for the Minnesota Legislature to get more in line with other states by trying to give that committee the muscle to go thumbs up or down on a future governor’s planned unallotments. The Legislature also may try to limit the total amount (in percentage terms) the governor can unallot.
DFLers may have the tacit support of Republican legislators in scaling back unallotment powers.
Although Republicans outwardly applauded Pawlenty “for being the adult in the room” by threatening to use his power of unallotment as the session neared conclusion, they also are nervous about yielding so much legislative power to the chief executive. They understand that in politics, nothing is constant. The day almost certainly will come when the roles are reversed and a Republican-controlled Legislature will be whining about a DFL governor acting as if he or she is king or queen.
But efforts at restricting gubernatorial powers will have to wait for another day.
For the moment, attention is on the immediate budget problem. The governor and Hanson are free to have at the budget, and Kelliher wonders if the governor isn’t feeling a little isolated.
“I think he has to feel a little lonely,” she said. “As much as he likes to think he acted as the adult, it reminds me more like the behavior you see from a teenager. You take an action without thinking through the consequences. … I’m still capable of working with the governor.”
Although there are rumors around the Capitol that the governor and legislative leaders will somehow get together and agree to a one-day special session to work out the mess, there is no evidence to support the rumors.
Since the session ended, there have been no olive branches extended from the DFL legislative leaders to the governor or vice versa. There have been no informal breakfasts. Not so much as a casual tweet.
“The governor sent a form letter to all legislators,” said Kelliher. “It wasn’t personal. It basically said, ‘Now I’m interested in your input.’ ”
Legislators spurn governor’s call for input
Brian McClung, the governor’s spokesman, forwarded comments the governor has received in response from a handful of legislators.
Sen. Warren Limmer, R-Maple Grove, for example, suggested the governor make across-the-board pay cuts for state employees, including legislators and the governor. (Limmer didn’t address, though, the legal complications arising from union contracts.)
Sen. Dan Skogen, DFL-Hewitt, suggested that the governor have a roundtable discussion, and Sen. Julie Rosen, R-Fairmont, asked that the governor protect state meth-treatment programs.
McClung said the governor “was hopeful” that other legislators would come up with more suggestions by the end of last week, the governor’s self-imposed deadline on receiving guidance from the legislators.
Legislative leaders opted not to participate in playing Pawlenty’s suggestion-box game.
“I stand by the work the Legislature did for five months,” said Keilliher, uttering what has become a standard line used by DFL leaders. “We talked with thousands of Minnesotans, we held hearings, we sought a balanced approach. We sent him a balanced budget.”
However, in a letter to the governor (PDF) released Friday, Kelliher and Senate Majority Leader Larry Pogemiller restated many of their concerns and asked him to “strongly consider the repercussions” of his planned actions.
Pawlenty also set up a website, seeking input from good-old, everyday Minnesotans about how the state could solve the budget crisis.
McClung forwarded some of those suggestions from unnamed citizens to MinnPost, too:
“When I was at the Capitol visiting legislators, I noticed that there are many nicely bound books that are published every year or two years,” one wrote. “They are the directory, with pictures of each legislator, etc. I think these are a waste of money. …”
Another citizen suggested the state “create tax revenue, create jobs, save gas” by keeping liquor stores open on Sunday.
Another citizen suggested that the state should expand gaming with a racino.
Still another applauded Pawlenty for vetoing a tax proposal that would have created a fourth income tax tier. “You should publicize what happened in Maryland recently when it raised taxes on wealthy taxpayers substantially and 1/3 of them relocated to another state,” the citizen said.
This sampling shows the governor’s not going to get $3 billion worth of ideas from either legislators or the public, particularly since many of the ideas could not be unilaterally implemented by the governor without legislative authorization.
Where’s he turning for advice?
According to McClung, Pawlenty met with his commissioners to discuss unallotment on May 21.
“We are having regular meetings as the process moves forward,” McClung wrote in an e-mail. “In addition, Commissioner Alice Seagren (Education), Cal Ludeman (Human Services), David Metzen (Higher Education) and Ward Einess (Revenue, e.g. cities, counties) are holding meetings with organizations and stakeholders that could be affected by possible unallotments to solicit their input and advice.”
Best guess is that the governor has already made most of his decisions. For the moment, he seems calm about doing what no governor has done before.
Doug Grow writes about public affairs, state politics and other topics. He can be reached at dgrow [at] minnpost [dot] com.