Update on Minnesota’s 2009 Legislative Session and Budget Issues

The Pawlenty administration has finished its preliminary proposal for unallotments in order to resolve the state’s projected budget shortfall of $2.68 billion in the 2010-2011 biennium. The Minnesota legislative session ended with spending bills being passed and signed into law that spent more than the state is expected to receive in revenues, which is not allowed by the Minnesota constitution. Some budget cutting measures were agreed to, thereby reducing the original $4.6 billion funding gap. Prior to the end of the legislative session, the governor announced that if a budget agreement was not achieved by the session’s adjournment, his administration would resolve the remaining deficit through the governor’s unallotment authority.

At his press conference on Tuesday, June 16, 2009, Governor Pawlenty said that the government should live within its means just as families and businesses are living within their means. He added that the proposed reductions will leave state government with 96-97% of its current biennial funding. Many of the proposed reductions are weighted toward the second year of the biennium which will give legislators and the governor another year to work on a budget agreement and avoid some of the cuts. The governor’s planned reductions would take effect on July 1, 2009, the beginning of the state’s next fiscal year.

The governor’s recommendations were presented Thursday, June 18, 2009 to the Legislative Advisory Commission where he sought input from legislators and others before finalizing the plan. The Commission members did not agree with the governor’s proposed unallotments. Management and Budget Commissioner Tom Hanson said the plan will likely be finalized by the end of the month.

The governor's proposed unallotments include:

• $1.77 billion in K-12 education payment deferrals and adjustments;
• $236 million in cuts to human services programs;
• $200 million in cuts to local government aid to cities and townships;
• $169 million through administrative actions;
• $100 million in cuts to local aids and credits to counties;
• $100 million in cuts to higher education;
• $67 million in reductions of refunds and other payments; and
• $33 million in reductions to most state agency operating budgets (approximately 2.25 percent per agency).

The Governor noted that he will reduce his office's budget, and asked the Legislature and other constitutional offices to voluntarily cut their own budgets as well.