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Friday, July 1, 2011

Minnesota State Shuts Down -- Budget Issues

Update

July 20, 2011: Governor signs bill to end shut down. The tipping point? Beer. 

July 19, 2011: Minnesota's "payday loan" -- incredibly poor return, highly speculative, -- and all for $700 million to cover current expenses, and nothing in the headlines about the $5 billion gap.

July 16, 2011: The can is kicked down the road, but the state is poorer, comes out with a worse credit rating, and will probably have to deal with budget shortfall again early next year.  The delay only made things worse. The number $700 million keeps popping up as the amount needed to get through the current debacle; the overall budget gap at one time was reported to be $5 billion.  Minnesota might want to look at some things its neighboring states are doing. The agreement still needs to be passed by both the House and the Senate.

July 14, 2011: Over? If so, was it due to beer? MillerCoors was going to have pull all 39 brands of beer in the state.

July 13, 2011: Over? According to radio news report, the governor is willing to sign the budget, contingent upon ... state Republicans have not responded to his "contingent" speech.

July 11, 2011: Longest shutdown in history; no new talks scheduled

July 10, 2011: No sense of urgency and now the bars may have to shut down

July 8, 2011: The rich are not unanimous in wanting to raise taxes on themselves. The governor's plan to tax the rich would be twice the tax rate paid in Illinois. At best it raises $700 million, a far cry from the $5 billion gap. By the way, the $700 million might be needed just to pay the increased interest rates that will now be levied on Minnesota as their credit rating tanks.

July 5, 2011: The budget impasse certainly doesn't seem to be all that urgent. It's hardly a front pae story in the Minneapolis Star-Tribune. The brief story simply states the governor and the GOP will resume budget talks about 2:30 p.m. this afternoon. If this were serious, folks would be meeting around the clock.

July 4, 2011, day 4: Highway construction comes to a halt; blue collar workers hit the hardest; shovel-ready jobs halted.
The blow from the shutdown has been almost immediate for hundreds of companies with state contracts. Across Minnesota, the private sector is bracing to see how dramatically the shutdown will affect the state economy, as lawmakers and the governor continue to argue over how to close a $5 billion deficit.

Matt Kramer, head of the St. Paul Area Chamber of Commerce, described the mood among his members as one of exasperation. "It's an almost resigned -- 'Can you believe this is happening again?'"

July 3, 2011: This is really quite incredible, a state shutting down and all the unintended consequences. And I always thought Minnesotans were smarter than Nodaks.
Minnesota stands to lose millions of dollars in revenue and get saddled with millions more in new expenses for every week that the widespread shutdown of state government persists.

In both subtle and stark ways, the shutdown that began Friday will bring new financial pain to the state treasury. Closing many operations will save the state some money, but an array of revenue sources as diverse as the lottery and highway toll lanes have been cut off.

Significant new costs also are emerging, some of which the state will never recover.
"It's not like money stops going out the door because of a shutdown," said John Pollard, a spokesman with Minnesota Management and Budget.

One of the biggest new expenditures: unemployment benefits for roughly 22,000 freshly laid-off state employees. In most cases, those workers are entitled to collect 50 percent of their pay while not working, according to a spokeswoman for AFSCME, the union that represents 18,000 state workers.
Original Post

Link here

Something tells me this will simply be a 5-day Fourth of July weekend for state employees, that the legislators will have made their point by Tuesday, and a budget will be passed by Tuesday night, July 5, 2011.

A win-win for everyone. 

Or not.

8 comments:

  1. I am from Moaistsota and there will be no deal on the 5th, unless they fly in Howie Mandel...

    BTW, Gov. Markdown Dayton, suffers from Mad Cow disease and should be removed from office..

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  2. You're probably right on both accounts. Smile.

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  3. Lottery = taking money from people. No lottery = people keep the money.

    Tolls = taking money from people. No tolls = people keep the money.

    The story, if true, suggests that the state parks etc. are profitable. If so, they can be sold, or the right to run them sold, to private owners. That is wonderful to know!

    For the first time in history, the Star-Tribune supports smaller government, private business, and people keeping their own money.

    In two months, think how many of these ideas they will reveal.

    anon 1

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  4. Incredible: shutting down their profit centers.

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  5. The Revenue Department would keep a skeleton crew - 40 of its 1,400 employees - on the job to collect taxes, but it wouldn't send taxpayer refunds, including about $90 million scheduled to be paid to 70,000 renters next month."

    Note: The Circuit-breaker checks for renters are supposed to be out by mid August and are used by many renters for "back to school" supplies. (Homeowner credits go out in mid-October). The renter payments are based on property taxes paid as part of rent and income. More renters than homeowners tend to be democratic. The payment is largest for lower income renter of housing that is not subsidized. The larger refunds to lower income are more important to them than people with higher income. Market renters with lower incomes (IE: tend to vote democratic) are at times LITERALLY banking on this mid August money.

    The payments to homeowners is scheduled for mid October. The logic here is that it can be used to pay second half-property taxes due 10-17-11. If a late penalty is applied because people depended on the circuit breaker homestead refund here is the penalty schedule. https://www16.co.hennepin.mn.us/taxpayments/ratestable.jsp

    Basically renters will be affected worse than homeowners by payment delays. The renters are more likely to be vote democratic.

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  6. Interesting. The whole thing is so incredible (as in unbelievable).

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  7. I have "ringside seat" to the Minnesota debacle. Basically a minimal effect on most Minnesotans. a lot of almost all union road construction and repair is affected. Beyond that some vendors with the state. Basically, the largest group is the "designated recipient" class and social service industry (AKA: "poverty pimps").

    These groups all tend to be democratic. The real "fireworks" will grow when it gets out that the rent credit payments will likely be delayed past mid-August. In Minnesota, property taxes are relatively high, especially for renters. A lot of good, decent lower income people pay market rent. A "Circuit breaker" not taxed "rebate" check usually around $1K is a HUGE deal to them. Many have already spent/promised the money.

    As a homeowner, I am expecting a CB rebate of more than $1K but it is not scheduled until mid-October. I expect all the rebates/refunds will eventually be paid but the lower income market rate renters will be yelping first and loudest.

    I have nothing against helping the needy but if you goodle "welfare mn" the third and fourth entries are stories saying that, according to the US census Minnesota has the highest percentage of gov expenditures of any state.

    Census numbers, just in time for today's talking points, say MN welfare spending at 37% (updated)

    http://www.startribune.com/politics/blogs/112933714.html

    Just as a debate on Minnesota health care spending rushes in at the Capitol, the Census Bureau offered some numbers to prime the pump.
    "State government spending on public welfare was greater than 30 percent of general expenditures in 11 states, led by Minnesota (37.5 percent)," the government numbers bureau said in a news release Wednesday.
    The numbers come from the Census' report on State Government Finances. Dig in to the numbers here.
    Worth noting: Although the Capitol debate Wednesday will focus on DFL Gov. Mark Dayton, Republican Gov. Tim Pawlenty was in charge when the numbers rose.
    (This post has been corrected to reflect that the 37.5 percent is a total percentage of spending. The state department of human services also says: "there are health care costs included in the definition of public welfare used by the Census Bureau that we don't account for in the same way in the state budget.")

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  8. http://www.myfoxtwincities.com/dpp/news/politics/mn-shutdown-dayton-agrees-republican-budget-july-14-2011

    UPDATE!

    Gov. Dayton Agrees to Republican Budget to End Minnesota Shutdown
    Special session could be called within three days

    Updated: Thursday, 14 Jul 2011, 11:05 AM CDT
    Published : Thursday, 14 Jul 2011, 10:24 AM CDT

    by Jeff Goldberg and Mike Durkin / FOX 9 News

    ST. PAUL, Minn. (FOX 9) - Minnesota Gov. Mark Dayton sent a letter Thursday to House Speaker Kurt Zellers and Senate Majority Leader Amy Koch, saying he "reluctantly" agrees to accept the Republican budget proposal from June 30 if it will end the government shutdown.

    Dayton said accepting the offer would bridge a $1.4 billion gap between him and the Republican leadership. The governor says he has "serious reservations" about the GOP plan, but Minnesota’s government shutdown must end.

    "If this gets resolved and gets Minnesota back to work in the next few days, then it doesn't matter what people say about me,” Dayton said.

    If an agreement is in place, Dayton says he’s ready to call a special session to end the shutdown within three days.

    To make a deal, the governor set the following conditions:

    Remove policy issues
    Drop 15 percent across the board in reductions to state employees in all agencies
    Pass $500 million bonding bill

    The Republican offer from June 30 included:

    A shift in K-12 school aid payments from 70/30 to 60/40
    Issuing tobacco bonds to cover the remaining gap
    Increasing the per student formula by $50 per year to cover additional borrowing costs
    Adding $10 million more to the University of Minnesota to equalize MnSCU cuts
    Restoring funding to Department of Human Rights and Trade Office

    That out-of-date offer included the detail of budget bills getting passed by July 11.

    GOP spokesman Michael Brodkorb said House Republicans were looking at the governor's offer late Thursday morning, but had no other comment.

    With all of that said, a budget plan to end Minnesota’s government shutdown is still far from a done deal. There’s no guarantee Republicans will agree to the rekindled proposal, and there’s no guarantee Democrats will follow Dayton’s concession.

    "I'm glad that Governor Dayton dropped his need for tax increases but I am not a fan of shifting more money from schools,” said Rep. John Kriesel (GOP-Cottage Grove). “This feels like more of a short term fix than the long-term structural reform we need. With that being said, I hope this deal brings an end to the shutdown."

    The governor said compromise was "totally lacking" on the other side, saying he exhausted all efforts and "I was basically negotiating with myself.”

    "Ignorance and arrogance are a very dangerous combination,” Dayton said. “Makes a democracy difficult to function.”

    He's calling it a relent, but sure has a lot of conditions for a relent.

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