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Shutdown picture becomes clearer; budget solution remains elusive

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Rest stop closed
Signs are posted and barricades are out closing the rest areas along Interstate 94 near Avon, Minn., Wednesday, June 29, 2011. Rest areas around St. Cloud, Minn., are being closed because of the possible state shutdown.
AP Photo/St.Cloud Times, Jason Wachter

The consequences of a Minnesota state government shutdown became clearer on Wednesday, when a court decided only "critical core functions" would continue. But the budget solution that would prevent it remained elusive.

With less than two days before being forced to lay off 22,000 workers, close state parks and halt road construction projects, state leaders were still discussing how to erase the state's projected $5 billion budget deficit for the two-year budget cycle that begins Friday.

Without a budget deal by then, "only the most critical functions of government involving the security, benefit, and protection of the people" would continue, Ramsey County Judge Kathleen Gearin said in her ruling Wednesday.

The budget crisis was complicated months ago, when voters sent a Democrat to the governor's office while giving Republicans control of both houses of the Legislature. Despite a five-month legislative session and hours of closed-door meetings, DFL Gov. Mark Dayton and GOP legislative leaders have made little progress in reconciling their differences over how to solve it.

The Legislature tried to balance the budget through cuts. Dayton vetoed most of them, saying they would hurt Minnesota's most vulnerable residents. He wants to raise taxes on wealthy Minnesotans, but Republican leaders so far have insisted on capping spending and are against adopting new sources of revenue. 

Gearin made it clear Wednesday that beyond those core services, it wasn't a court's job to decide how the government should spend its money. She gave construction projects as an example.

"The delay in construction and increased costs that will likely happen as a result of a government shutdown will be because of the executive and legislative branches failing to resolve the budget issues," she wrote.

Judge Kathleen Gearin
Ramsey County Chief Judge Kathleen Gearin listens to arguments on the state shutdown during a legal hearing, Thursday, June 23, 2011, at the Ramsey County Courthouse in St. Paul, Minn.
AP Photo/Jim Gehrz, Pool

The decision left nonprofit organizations scrambling, and state workers and their families bracing for a sudden loss of income. 

"I think for the nonprofit sector, it's very unfortunate," said Jon Pratt, executive director of the Minnesota Council of Nonprofits. 

The judge acknowledged that many nonprofits were doing important work, such as helping citizens work their way out of poverty and providing jobs for private industry. But the court would be "over-extending its authority" by ordering the state to continue writing checks to many of those nonprofits, she said.

Pratt said that while most nonprofits were left out of the court ruling, many will try to have their funding restored by Special Master Kathleen Blatz, who Gearin appointed to oversee additional funding issues during the shutdown. Blatz is a retired chief justice of the Minnesota Supreme Court.

Meanwhile, state workers facing layoffs urged a deal that would save their jobs. Under Dayton's recommendations, most of which Gearin agreed to, keeping critical functions operating during a shutdown would require only about 13,250 employees — roughly 37 percent of the state's work force.

Things like road construction and state child care assistance won't be funded during a shutdown, and nearly four dozen state agencies would close. Prisons, nursing homes, unemployment benefits, subsidized health insurance and hospitals would keep operating, along with payments to school districts, local governments and federal programs administered by the state.

While state worker unions expected the ruling, union leaders said they were disappointed.

Child care shutdown
Gretchen Raymer supervises the playground at Creative Kids Academy, where she is the director. Subsidies to child care facilities like this one would be suspended, should a government shutdown ensue.
MPR Photo/ Sasha Aslanian

"We think every employee is critical and core," said Eliot Seide, executive director of the American Federation of State, County and Municipal Employees council that covers many state workers.

Seide listed off examples ranging from inspecting and maintaining roads, to making sure drinking water is clean or checking gas pumps to ensure motorists aren't getting cheated.

Workers approved a shutdown agreement that would allow them to keep receiving health benefits. But their paychecks would stop, and no vacation or severance would be paid during the shutdown.

Seide doesn't expect workers will get any back pay for being laid off, but he said the unions will be evaluating the impacts of a shutdown and decide later whether to seek relief from the Dayton administration after the shutdown.

During Minnesota's only previous shutdown in 2005, state workers were able to get back half of their lost vacation in an agreement with Gov. Tim Pawlenty's administration. 

Seide blamed the likely shutdown on the Republican-controlled Legislature. The union has embraced Dayton's budget proposal, which would raise the income tax rate for wealthy Minnesotans.

"It's un-Minnesotan for the Republican Legislature not to take its governing responsibilities seriously," Seide said. "It's time for them to get serious, and it's time that we all participate in fixing this state, and that includes the richest 2 percent paying their fair share of taxes. We can avoid this shutdown and we can avoid risky cuts to vital public services." 

Dayton's attorney David Lillehaug praised Gearin for reaching what he termed the "practical middle ground" in government-shutdown litigation. 

Even with the court order, Lillehaug said a shutdown will be tough and people will notice.

"Anyone who says that government doesn't do anything and doesn't do it well, upon reading this order and if we do reach a shutdown on July 1, they're going to realize they're very, very wrong," he said.

Dayton issued a statement Wednesday afternoon saying he doesn't want a shutdown.

"I would much prefer to find a fair and balanced budget solution, rather than a government shutdown.  I am continuing to work toward a compromise needed to move forward," Dayton said.

There was no immediate reaction to the ruling from GOP legislative leaders. 

Budget negotiations were expected to continue.

JUDGE SIDES WITH DAYTON

Gearin mostly agreed with Dayton's definition of "critical core functions," which was more limited than what Attorney General Lori Swanson had argued. In her 19-page written order, Gearin identified "critical core functions" as: 

• Basic custodial care for residents of state correctional facilities, regional treatment centers, nursing homes, veterans homes and residential academies and other similar state-operated services.

• Maintenance of public safety and immediate public health concerns.

• Provision of benefit payments and medical services to individuals.

• Preservation of the essential elements of the financial system of government.

• Necessary administration and supportive services, including but not limited to computer system maintenance, Internet security, issuance of payments.

"The court must construe any authority it has to order government spending to maintain critical core functions in a very narrow sense. Discretionary appropriations are the province of the legislature, not the courts," Gearin wrote.

During the shutdown in 2005, Special Master Ed Stringer heard from dozens of petitioners who wanted their funding continued. Blatz will likely hear from even more, because in 2005 only part of the budget hadn't been enacted by the July 1 deadline. This time, Dayton and the Legislature have enacted only the budget that funds the Department of Agriculture.

Swanson said she was pleased Gearin recognized school funding, medical and food assistance as essential and said further issues can be addressed before Blatz.

(MPR reporter Tim Pugmire contributed to this report.)