Politics & Policy

Minnesota’s Budget Muddle

The state’s shutdown fight is far from over.

Minnesota governor Mark Dayton (D.) has agreed to accept the Republican-controlled state legislature’s plan to cover Minnesota’s $5 billion budget gap without raising taxes. Sounds like a victory. But Republican legislators haven’t cracked open the champagne yet. In fact, they have yet to comment on the proposal.

Because it sounds too good to be true.

Dayton has added three stipulations to his offer: First, Republicans must drop their policy proposals touching on abortion, stem-cell research, and voter-ID laws. Second, they must end their demand for an across-the-board, 15 percent cut in the number of government employees. Third, Republicans must agree to a $500 million bond issue to fund infrastructure projects around the state.

“Let’s be clear. Governor did NOT accept the June 30 offer,” Republican senator Dave Thompson tweeted. “He has simply attached new conditions to the June 30 framework.”

“I’m not all that excited about this deal,” Peter Nelson, a policy fellow at the American Experiment, a conservative think tank based in Minneapolis, tells National Review Online. Although Republicans had considered many serious policy proposals earlier in the year, the offer to which the governor attached his conditions relied on one-time gimmicks to close the budget gap.

For instance, the state government currently gives school districts only about 70 cents of every dollar it promises, pledging to give the other 30 cents in the next biennial budget. In effect, the state delays total payment to balance the books. Nelson says school districts have been able to cope with these delays reasonably well so far. But if the government implements the Republicans’ proposal, school districts will get only 60 cents on the dollar. All in all, the government will delay $700 million in school payments.

In addition, the deal requires the government to issue $700 million in bonds on future revenue from the state’s settlement with the tobacco companies.

True, the deal involves significant cuts to social-service programs. And the Republicans have pushed for structural changes, such as performance-based budgeting, sunset provisions on legislation, and a premium-support model for Medicaid. But Dayton is lukewarm toward these policies, and it’s unclear whether he will try to take them off the table when he meets with legislators today. If these changes are set aside, then his concession will only mark “another session where we’ve kicked the can down the road,” Nelson says.

So, does the Minnesota example hold any lessons for the federal debt-ceiling talks? “It’s hard to draw an example because Minnesota is under the pressure of actually having to have a balanced budget,” Nelson says.

— Brian Bolduc is a William F. Buckley Fellow at the National Review Institute.


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