Court's ruling makes state budget picture more complicated

Gov. Tim Pawlenty
Gov. Tim Pawlenty discussed the Minnesota Supreme Court's ruling regarding the unallotment case and last year's budget cuts.
MPR Photo/Jeffrey Thompson

A Minnesota Supreme Court ruling that struck down a unilateral cut Gov. Tim Pawlenty made last year could make the Legislature's task of balancing the budget more complicated.

The Supreme Court, in a 4-3 ruling, said Wednesday that Pawlenty overstepped his authority when he used his unallotment authority to cut a nutrition program for low-income Minnesotans.

The $5 million program was just one of many cuts Pawlenty made on his own last June after he and DFL legislative leaders failed to agree on a plan to balance the state's budget.

Pawlenty used a power called unallotment to cut spending after vetoing bill that would have increased taxes to pay for the spending.

After Wednesday's court ruling, Pawlenty said he will ask the Legislature to ratify the approximately $2.7 billion in cuts he made through unallotment. That would minimize a budget shortfall that could grow to more than $3 billion, assuming the court's ruling applies to the other unallotment cuts Pawlenty made.

The court's ruling was the latest -- yet potentially the most significant -- piece of the budget puzzle state lawmakers will have to address with less than two weeks remaining in the 2010 legislative session.

Chief Justice Eric Magnuson
Minnesota Supreme Court Chief Justice Eric Magnuson during oral arguments in the Minnesota Judicial Center in St. Paul, Minn. on March 15, 2010.
AP Pool Photo/Richard Sennott

Recently it became clear to lawmakers that $405 million in federal funds won't arrive in time to help plug the budget hole.

Pawlenty said he strongly disagreed with the court's decision, but he acknowledged that the state's budget will need major changes.

"The funds simply do not exist in the state's budget currently to reinstate this unallotment decision," he said, adding that he will stand firm against raising taxes to balance the budget.

If the Legislature ratified the unallotment cuts, Pawlenty said, it would make things a lot easier.

"If they do, that this issue will be resolved and we'll be able to move forward as we had outlined," he said.

At the very least, Pawlenty called on the Legislature to pass a school payment delay that would erase $1.7 billion in state spending. If lawmakers do that, lawmakers will be looking at a budget shortfall of $1.2 billion.

DFL legislative leaders said they hope to work together with the governor to solve the budget.

House Speaker Margaret Anderson Kelliher said she and other leaders hope to sit down with Pawlenty to discuss the options, which she said should include a discussion about additional tax revenue that could be part of the solution.

"He just didn't want to deal with the issue that has dogged him for a long time, and that is to bring revenue into the state in a fair way," said Kelliher, the DFL-endorsed candidate for governor. "It is important for our state to have a balanced approach to this."


With the end of the session quickly approaching, however, there was already talk of a possible special session.

Sen. Dick Cohen, a Democrat from St. Paul who is chairman of the Senate Finance Committee, said the possibility of gridlock would be reduced if the governor stopped pushing budget cuts that have been widely rejected by the Legislature.

"When we've tried to force an effort to pass the governor's budget this year, his proposed budget, the Republicans haven't supported it in the State Legislature. And that seems to be the difficulty. There seems to be one person in the state who supports his solution and that's the governor."

DFL House Majority Leader Tony Sertich downplayed the prospects of a special session, but warned Pawlenty has to start working with the Legislature.

"Not everybody gets everything that they want and that is the definition of compromise and what's necessary. We will sit at the table bipartisanly and try to work out the solution and we hope the governor joins us. I think the governor has instructed us to do so."

Sertich said all options, including a possible tax increase, should be on the table to fix the state's budget problem.

Senate Minority Leader David Senjem, R-Rochester, was optimistic that lawmakers could get the job done before May 17. But he said the Legislature should seriously consider ratifying Pawlenty's cuts.

"That would seem to me to be the option," he said.

But Sen. Julianne Ortman, R-Chanhassen, isn't optimistic about finishing work on time.

"I think we're going to be in special session. I don't know how we can avoid that," said Ortman. "I don't know how we avoid it at this point, unless we have some real leadership in the House and Senate that are ready to take on these cuts, and make the cuts that the governor was willing to make on our behalf."

While the pending budget deficit is a problem this session, it's minor compared to the looming budget problems for the next two year budget cycle. State finance officials are predicting a $5.8 billion budget deficit in the 2012-2013 budget.


While Pawlenty and the Legislature negotiate on the current two-year budget, the court ruling could have implications for future budget negotiations between the governor and legislators.

Supreme Court Chief Justice Eric Magnuson noted in the ruling that Pawlenty's decision to cut the Minnesota Supplemental Aid Special Diet Program came before the budget-making process was completed.

While the unallotment statute gives the governor authority to address "an unanticipated deficit that arises after the legislative and executive branches have enacted a balanced budget," that wasn't the case last year when Pawlenty used the authority, the court wrote.

"Because the legislative and executive branches never enacted a balanced budget for the 2010-2011 biennium, use of the unallotment power to address the unresolved deficit exceeded the authority granted to the executive branch," Magnuson wrote.

Three justices dissented, including Lori Skjerven Gildea, G. Barry Anderson and Christopher Dietzen.

Gildea wrote in her dissent that Minnesota's Constitution requires a balanced budget, and that the unallotment power was given to the governor to fulfill that obligation.

"Whether that process is the wisest or most prudent way to avoid deficit spending is not an issue for judicial review," she wrote. "That question should be left to the people themselves to debate and resolve through the political process."

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