The last time Minnesota state government was shut down as a result of budget brinkmanship, most of Minnesota state government didn’t shut down.

It was 2011, and about 80 percent of government functions were considered essential during the 20-day shutdown and ordered funded by the Ramsey County district court, according to an after-action report written by Minnesota Management and Budget. 

“Major health and human services programs, educational institutions, and local aid recipients all received continued state support,” reads the MMB report. “Additionally, direct state services were provided by corrections, public safety and state institutions. Other state institutions, such as the higher education system, had independent revenue sources and authorities that allowed them to continue to operate.” 

And though 19,000 state workers were laid off and some services were delayed, it could have been far worse had the shutdown actually meant … shutting down the state government. 

The 2021 state Legislature is now working to put the details on a dozen spending bills lawmakers need to pass — and have Gov. Tim Walz sign — before a midnight June 30 deadline, and few think a shutdown is likely, given a recent agreement on how much each area of the budget can spend over the next two years.

But should state lawmakers and a governor find themselves in a shutdown stare down again, those who rely on state government might not be so immune as they were a decade ago.

‘It’s a much bigger deal now’

Blame, or credit, for the new budget reality goes to yet another governor-Legislature budget dispute from 2017 and then-Gov. Mark Dayton’s veto of the Legislature’s budget. Deep in a Minnesota Supreme Court decision on a lawsuit coming out of the standoff was this legal and political message: The courts weren’t going to act as emergency legislatures anymore.

“The language of Article XI, Section 1 of the Minnesota Constitution is unambiguous: ‘No money shall be paid out of the treasury of this state except in pursuance of an appropriation by law,’” wrote Chief Justice Lorie Gildea for the majority in the 6-1 ruling in The Ninetieth Minnesota State Senate vs. Mark B. Dayton.

“The purpose of this provision in Article XI is ‘to prevent the expenditure of the people’s money without their consent first had and given,” Gildea wrote, quoting from a 1914 court ruling. “Article XI, Section 1 of the Minnesota Constitution does not permit judicially ordered funding for the Legislative Branch in the absence of an appropriation.”

Even a dissent in the case that disagreed with the majority’s ruling nevertheless agreed with Gildea’s message on court-ordered appropriations. “The court thoroughly examines the constitutional language and our decisions that support the conclusion that ‘core funding’ judicial orders are not constitutionally permissible,” wrote Justice Barry Anderson. 

Those paragraphs have since changed the atmosphere around end-of-session budget talks. No longer would a shutdown be pretty bad. It would now be very, very bad. And that might have taken that threat off the table for all sides.

Five days before he reached an agreement with Gov. Tim Walz and House Speaker Melissa Hortman on what are called global budget targets, Senate Majority Leader Paul Gazelka said the court’s ruling was on his mind. “Their ruling basically tells me that a lot of things would shut down and that would not be good for Minnesota,” said Gazelka, who noted that nursing homes were funded in 2011 despite the lack of a budget.

“It’s a much bigger deal now,” said Gazelka, an East Gull Lake Republican. “We’re committed to not shutting down Minnesota, but we’re also fighting for the things we think are important.” 

The Legislature is expected to return to St. Paul by June 14 with individual budget agreements and policy details for the Legislature’s omnibus bills in hand. But the agreement by Walz, Hortman and Gazelka does not guarantee that all the bills will pass, and it is possible that ongoing disagreements over issues such as police reform and the clean car emissions standards could hold up the bills dealing with judiciary and public safety as well as environment and natural resources.

No more ‘easy way around a shutdown’

The 2017 court ruling ended a suit filed by the state Senate against Dayton for line-item vetoing the House and Senate funding from a budget bill, leaving them technically without funds to exist after July 1. Dayton said he would be open to signing a new version of the funding if the GOP-controlled House passed a series of bills he’d wanted but that weren’t adopted. Dayton was also angry that the GOP-controlled Legislature had placed the funding for the Department of Revenue inside a disputed tax omnibus bill, meaning had he vetoed the bill the tax collectors would have been defunded.

The suit asserted that Dayton’s veto was unconstitutional because it shuttered a constitutionally created branch of government that is co-equal to the executive. The veto was also illegal, the suit claimed, because it was used to coerce the Legislature. 

After hearing from both sides — with Gazelka and Dayton in the courtroom — the Supreme Court first ruled that the veto was legal and that no constitutional crisis was apparent because the House and Senate had leftover funds from previous appropriations that would let it keep operating until the 2018 session convened. The court ordered the two branches into mediation. When a deal did not emerge, it issued its written ruling that November.

The discussion on the court’s authority to order emergency funding came up because Dayton had argued that one of the reasons why the veto wasn’t unconstitutional was because the court could simply order the money to be appropriated. But as Gildea wrote: “The plain language of Article XI, Section 1 of the Minnesota Constitution does not authorize the judiciary to order funding for the Legislature in the absence of an appropriation.”

Scott Knudson was one of the attorneys representing Dayton before the court. He said the forward-looking aspects of Gildea’s ruling was unexpected and disappointing. Unexpected because it wasn’t necessary to resolve the primary issues of the suit; disappointing because it made future government stalemates more risky.

At the time, Dayton’s legal team had relied on the 2011 precedent that a court could order funding for essential government functions, in this case the Legislature. “We argued that the court could authorize funding of core functions of government — to keep the state patrol on the highways, be sure the prisons are staffed and so forth,” Knudson said. 

Gildea disagreed.

“She overturned what we called the common law of Ramsey County on core-function funding in the event of an impasse over appropriations,” Knudson said. “She didn’t have to reach that issue but did. So even though the governor prevailed on the validity of the veto, what happens in the next budget impasse seemed to be that: You better come to an agreement because there won’t be any easy way around a shutdown without an appropriation.”

That “plain-language reading of the constitution,” Knudson agreed, changes the dynamics around budget negotiations. But Knudson said the opinion did leave a “safety valve” for future court intervention under a different set of facts, with Gildea writing: “Our decision today should not be read to foreclose the possibility of a judicial remedy in a different situation.”

Richard Cohen served 40 years in the Legislature, 36 of those in the Senate and 12 of those as chair of the Senate Finance Committee. Dayton’s veto of legislative funding also impacted nonpartisan functions such as the code revisor and the Office of the Legislative Auditor, he said, and the court-ordered mediation was “designed to fail,” which it did after just two days.

Cohen, a DFLer from St. Paul, said the 2017 court ruling was the first where the court gave an opinion on court-order essential funding. The 2011 Ramsey County district court intervention was not challenged, likely because both sides were happy that nursing homes and prisons and state troopers were still funded. “There was never a definitive Supreme Court opinion,” which may have led budget negotiators to think the worst impacts of a shutdown could be halted by the courts, said Cohen, an attorney.

 Until Senate v. Dayton.

“It does establish a pretty strong precedent of the disallowance of the appointment of a master,” Cohen said. “It would seem to me that the folks in leadership would be well advised to try to finish (the budget).”