List of the potential costs of a shutdown
No one knows exactly how much a shutdown would cost the state. A lot of it will depend on how long a shutdown lasts and what state services a court allows to continue without a budget deal. Even if Gov. Mark Dayton and the Legislature work out a deal before Friday, there will still be planning and preparation costs being incurred now.
Below is a list of the costs associated with a shutdown.
LOST STATE PARK REVENUE: The Minnesota Department of Natural Resources estimates that $1 million per week is generated at state parks during July from camping fees, vehicle permits, tours and sales of wood, ice and other merchandise. DNR officials say closing state parks would also result in about $12 million per week lost to the local tourism economy.
LOST PRODUCTIVITY FROM PLANNING: State agencies as well as nonprofit groups and school district are spending many hours planning and preparing for a state government shutdown. It's time most of those workers would normally be spending on other things. In 2001, planning cost the state about $2.7 million even though there was no shutdown. The planning cost was similar in 2005.
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LOST PRODUCTIVITY DURING SHUTDOWN: The state wouldn't pay employees' severance or vacation during a shutdown under an agreement the state worker unions are currently voting on. But workers would likely seek severance pay in a lengthy shutdown. That would mean workers are being paid for not working, minus vacation time. In the 2005 shutdown, lost productivity was estimated at about $10 million.
LOST LOTTERY REVENUE: The Minnesota State Lottery wouldn't operate during a shutdown, so no tickets would be sold. In an average week in 2010, the lottery contributed $2.3 million to the state.
LOST FORESTRY REVENUE: Minnesota Forest Industries, a trade group, says the forest industry pays the state about $229,000 a week to harvest wood on state land. The industry says it generates another $655,000 a week in state and local taxes.
CREDIT STANDING: Former state finance commissioners Peggy Ingison and John Gunyou said credit rating agencies won't look at a shutdown favorably when deciding how to treat the state. Investors might also be less trusting. But one rating agency, Standard & Poor's Ratings Services, said the state's overall rating probably would not be affected by a shutdown.
BUSINESS INVESTMENT: Delays to things like road construction projects could make businesses question their partnerships with the state. Gunyou, who is Minnetonka's city manager, sites the Bren Road/Highway 169 project as an example. UnitedHealth Group is paying $5 million toward the project, because it is building a new facility and bringing jobs to the area. Businesses that are forced to delay their plans might be less likely to partner with the state in the future.
HALTING CONSTRUCTION PROJECTS: The simple act of stopping and starting can be costly: Halting and restarting work on the Interstate 494-Highway 169 project in the southwest metro could cost as much as $400,000, the construction company leading the project told MPR News last week. If delays last long enough, there could also be increased penalties that need to be paid to the construction companies. Missing the construction season could also be an issue in the event of a long shutdown.
LOWER INCOME AND SALES TAX RECEIPTS: This is a ripple effect some have pointed out, but it's unclear how big of an impact it would be. The idea is that layoffs in state agencies and nonprofits would mean those people aren't paying the state income tax. If they aren't earning a paycheck, they're also not spending money, which could have an impact on sales tax revenue.
UNEMPLOYMENT DEFICIT: If a large enough number of Minnesota workers are laid off during a shutdown, the state's unemployment fund could go further into deficit. When the fund is in deficit, the state borrows from the federal government, but that system requires the state to eventually pay the feds back, including interest, said Monte Hanson, spokesman for the Minnesota Department of Employment and Economic Development.
INTEREST AND FINANCIAL PENALTIES: Delayed payments can result in financial penalties. Delays could hit everyone from state workers to nonprofit agencies to welfare recipients. In the 2005 shutdown, Ingison, who was finance commissioner, said letters were provided for people who wanted to ask banks and creditors to forgive late payments without penalty. It isn't clear what will happen in a state shutdown this time.
LOST OPPORTUNITY FOR MEANINGFUL CHANGES: Rather than spending their time figuring out ways to make state government work better and more efficiently, officials are spending their time preparing and planning for a shutdown, or fighting over a budget number. It's a cost that's difficult to quantify.