Minnesota’s budget battle is unique among many states’ financial problems

It could be the second time in six years that the state suspends many of its services, and this one may last a lot longer than eight days.
MinnPost photo by Terry Gydesen
It could be the second time in six years that the state suspends many of its services, and this one may last a lot longer than eight days.

Minnesota’s budget shortfall isn’t unique. Neither is the intense partisan divide that so far has prevented lawmakers from solving it.
In fact, the state’s $5 billion deficit is only a small part of the roughly $80 billion in total budget gaps that state legislators across the country must fill for the next fiscal year — nearly all by the end of June, according to the National Conference of State Legislatures.
Minnesota and 48 other states have either a statutory or constitutional deadline to pass a budget, and nearly all of them begin a new fiscal year on July 1.
The problem?

No more easy fixes
Lawmakers are out of easy fixes: Federal stimulus funding is drying up, rainy-day money is gone as a result of constant budget deficits, and many states have already increased taxes since 2008 to combat falling revenues.
“No legislator likes to inflict pain,” said Bob Stern, president of California’s Center for Governmental Studies. “They always want to defer, defer, defer [payments] until there’s a golden surplus at the end of the rainbow.”
Minnesota has deferred, deferred, deferred — most notably with more than $1 billion in delayed payments to the K-12 education system — and will almost certainly do so again during this budget cycle. But even after stiffing the schools, a large shortfall remains — one that the GOP-controlled Legislature and DFL Gov. Mark Dayton haven’t come closer to solving since January.
Minnesota isn’t alone in that regard, either.

Republicans swept the 2010 elections, gaining 22 state chambers and a handful of governors’ offices in the process. About 4,000 GOP legislators in statehouses across the country outnumber their Democratic colleagues by some 700 seats.
About 15 state governments — including Minnesota’s — are politically divided or stand at a stalemate. With strong conservative electoral gains and an influx of new state lawmakers who feel they have a mandate from voters to trim government spending, some states’ budget negotiations are stuck in concrete.
So, it’s obvious that states across the nation — not just Minnesota — are in trouble when it comes to passing their state budgets on time. About 20 states haven’t reached an agreement yet, according to the national conference.
Even so, Minnesota’s situation appears to be one of a kind. Despite other states having similar problems, Minnesota appears to be the only one headed for a partial state government shutdown, potentially the second one in six years.
“From what I can see, it seems like Minnesota is the state that’s furthest along in the shutdown talks,” said Michele Mariani Vaughn, a research manager with the Pew Center on the States in Washington, D.C.
“Nobody really is facing the situation Minnesota is,” said David Schultz, a public policy expert from Hamline University and occasional MinnPost contributor. “We are unique.”
Other states can’t compare
Minnesota’s $5 billion budget deficit seems puny, compared with the ones facing states like California and Texas. Even New Jersey’s shortfall is double the gap lawmakers are grappling with in St. Paul.
So why are we one of the few states seriously considering a partial government shutdown? There is no clear answer.
Data show other states also face the “intense ideological partisan polarization,” as Schultz puts it, that Minnesota’s government does, but few are clamoring to temporarily end state services.
“I don’t think the budget problems in the middle part of the country are nearly as bad as they are on the coasts,” said Kevin Leicht, director of the Iowa Social Science Research Institute. “The problems aren’t nearly as serious, but they seem to be played as if they are, almost as if there’s a competition to say, ‘Our budget problems are as serious as New Jersey’s.’ “
Many experts consider Minnesota, New Jersey and North Carolina the states closest to government shutdowns this year. Iowa is another state to watch.

Gov. Chris Christie
REUTERS/Jeff Zelevansky
Gov. Chris Christie

New Jersey lawmakers and GOP Gov. Chris Christie on Wednesday announced a breakthrough in negotiations over a pension and health benefit overhaul for state employees, bringing them one step closer to tackling the state’s $10 billion budget deficit.
A number of budget proposals are floating around Trenton, but a New Jersey Supreme Court decision last month on school funding complicated the situation. The court ruled unconstitutional $500 million in Christie’s cuts to some of the state’s poorest school districts.
New Jersey underwent an eight-day government shutdown in 2006, and Christie made it clear he’s willing to reach that point again to preserve other proposed cuts. In 2010, when Democrats tried to bully Christie into a deal like they had with his predecessor, Jon Corzine, the newly elected governor refused to play.
“Christie’s attitude was, ‘I’m a state employee; I’m going home,” said Jennifer Duffy, a senior editor of the Cook Political Report.
“Take a look at me. You think I’m sleeping on a cot [in my office]? It’s not happening,” Christie said on Fox News in February.
During the 2006 shutdown, New Jersey laid off more than 40,000 state employees, stopped inspections on casinos in Atlantic City and closed state parks, among other actions.
Ultimately, the shutdown reflected more poorly on the Democrats in New Jersey’s Legislature, who were used to holding weaker governors hostage, Duffy said.
People realized “Oh, our beaches are mostly state parks,” she said. “It really kind of hit people, that ‘Oh wait, this isn’t so great.’ “
New Jersey’s Legislature, unlike Minnesota’s, meets throughout the year, which ups the chances a deal can be reached — and passed — by the constitutionally mandated deadline of June 30.
Dayton would have to call a special legislative session to pass the state’s remaining nine budget bills, something he said again Thursday won’t happen until a global budget deal can be reached with Republican lawmakers.
“I’ll be doing everything I can for the next two weeks,” he said on Wednesday.
Fixing deficits, plus more problems
Despite all the rhetoric, at least 20 states have enacted biennial budgets, and many more are expected to finish in the coming weeks, said Todd Haggerty, a policy fiscal analyst at the national conference.
The majority of those states finished balancing their budgets with spending cuts. In many cases, though, states raised taxes in earlier years to help ease the pain.
Now, though, “Everyone is cutting,” Sujit CanagaRetna, a tax and budget expert at the Council of State Governments, told Stateline.org. “It’s a given.”
New York nearly erased its $10 billion deficit with $9.3 billion in cuts. Florida and Arizona each cut their budgets by about $1 billion. The states’ total general fund spending declined by more than 6 percent last year, according to the National Association of State Budget Officers.
That trend follows what Republican leaders have repeated all session: Minnesota will be in the minority if lawmakers rely on tax increases to bridge the $5 billion shortfall.
But the reduction in services that other states will have to bear could be a hefty price to pay for balancing budgets without tax increases.
New York cut 3,700 prison beds and reduced judiciary funding by $170 million, Stateline reports, while Florida slashed social worker compensation by 15 percent.
Perhaps the biggest cuts, however, come from K-12 education and Health and Human Services spending. Florida is set to cut $2.5 billion from its base spending for K-12, and lawmakers in Texas may reduce state funding to schools by $4 billion.
It’s these sorts of “draconian” cuts that Dayton says he resolutely opposes. “Some things are worth standing up and fighting for,” he told reporters Wednesday.
To Leicht, the Iowa political expert, lawmakers with strong ideologies on both sides of the aisle see a sort of purity in shutting down government over principle.
“In order to really prove that you really mean what you say, you have to shut the government down to do it,” he said.
It seems that the trend is blowing in from the right, nationally. “It is a new phenomenon,” said Linda Bilmes, a public policy professor at Harvard University’s Kennedy School of Government. “It certainly is changing the political discussion nationwide, and in Washington it has been a sea change in the way budget negotiations are occurring.”
In Minnesota, though, Dayton seems more open to a shutdown than do Republican legislative leaders. The governor took his strongest stand to date for a government shutdown on Wednesday and reaffirmed it following budget negotiations with the GOP leaders Thursday.
“As difficult as it would be, a shutdown still pales in comparison with the devastating effects of the Republican budget,” he said.
Shutdown repercussions
Not only is Minnesota one of the few states facing a shutdown but it’s also part of a group that’s especially hamstrung in its ability to keep “core” government services open.
Take Iowa, for example. In the event of the state’s first-ever government shutdown, Gov. Terry Branstad has broad powers to keep essential government operations open — something Minnesota lacks.
“The governor will ensure the health, safety and well-being of all Iowans will not be compromised,” said administration spokesman Tim Albrecht. “[A shutdown] is certainly a new challenge for us, but it’s not something we can’t handle.”
Many other states have the power to enact temporary budgets. Some, like Wisconsin, simply continue the previous year’s appropriations.
In Minnesota, though, the courts will determine which government services are essential. Both Dayton and Attorney General Lori Swanson have filed court papers outlining their idea of essential government services.
Right now, it appears 36,000 state employees could be temporarily laid off, and state parks and a list of agencies would close or have only limited scope.
Reassessing the budget process
Some say Minnesota’s budgeting process is outmoded and inefficient. The Legislature is in session for nearly two months before budget negotiations begin with the governor, making tough political battles like the one stretching past this session even more difficult to resolve.
“We have a horse-and-buggy budget process for the 21st Century and it needs to be reformed,” Schultz said. “Maybe at one point, when the budget was not so big and the process was not so complex, you could do it in three or four months and go back and become farmers for the rest of the year.”
Other states, for instance, have taken proactive measures to ensure budgets are completed on time. In West Virginia and Maryland, lawmakers are only allowed to consider the state budget after a certain deadline.
In California, a constitutional amendment that was first tested this year prevents legislators from being paid if they haven’t passed a budget by June 15. Washington state lawmakers can be charged with a criminal misdemeanor if a budget isn’t approved 30 days before the beginning of a new biennium, although the provision has never been enforced.
With deadlocked leadership and dwindling time, the Dayton administration is preparing for a government shutdown.
It could be the second time in six years that the state suspends many of its services, and this one may last a lot longer than eight days. Minnesota is one of five states that have shut down government since 2002. Those closures have lasted anywhere from a few hours to eight days.
When asked what it’s like to lead a state on the forefront of government shutdowns across the country, Dayton replied: “I wouldn’t choose it.”

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Comments (4)

  1. Submitted by Phyllis Kahn on 06/18/2011 - 12:00 pm.

    As we look at the costs of even planning for a shutdown, a bill I put in should look more attractive. This would continue last year’s appropriations like the WI law. neither side however supports this as both reject the concept of negotiating except when facing a crisis. Male macho approach to governing.

    Phyllis Kahn, State Rep 59 B

  2. Submitted by steve anderson on 06/19/2011 - 11:25 am.

    … When asked what it’s like to lead a state on the forefront of government shutdowns across the country, Dayton replied: “I wouldn’t choose it.” – But that is his choice even though he said it was something he would not do. Not sure where his head is on this one since raising taxes is not guaranteeing the additional amount of revenue he wants. Once taxes are raised, government will spend as if the money is going to be there. If there are money problems, lets try spending reductions not spending increases.

  3. Submitted by Arthur Swenson on 06/21/2011 - 06:28 am.

    It is WAY PAST time for the legislature to get their collective head out of the sand and START GOVERNING!

    Whatever mandate they may have, it most certainly is NOT for shutting down the state in order to protect the top 2 percent.

  4. Submitted by Anita Newhouse on 06/22/2011 - 08:58 am.

    Governor Dayton won statewide election by campaigning to raise revenue by raising taxes, while individual legislators made campaign pledges unique to their individual districts. It seems incombant upon legislators to forge their individual “mandates” into a workable compromise as one body of our state government and THEN present and negotiate with the Governor’s vision for the state. Because our legislative majorities of late are not capable of working within this constitutionally prescribed format, we end up with inworkable, polarized stalemates. Our current legislature has an accountability problem-not the governor! If they had done their jobs, we would not be facing a shutdown now. The governor and most Minnesotans know this. We all learned this civics lesson in high school!!

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