Dayton shutdown plan would spread pain broadly

Effects would be felt in private economy and by public aid recipients

The stark contours of Gov. Mark Dayton’s shutdown filing Wednesday in Ramsey County District Court have sent shivers down the spines of a broad assortment of people who work for and with the state. School officials, social service providers and heavy industry are among the groups that are bracing for state funds to dry up after July 1.

The Dayton administration petition envisions a shuttering of state services that goes far beyond the scope of the closures enacted during Minnesota’s partial government shutdown in 2005. What follows is a survey of some areas that could be deeply affected if the court goes the governor’s way.

K-12 education

Dayton’s petition would keep only six state Department of Education employees on the job. The only three functions in the agency that would continue during the shutdown are reporting of maltreatment of minors, a building security arrangement, and incident command and support for critical services.

School districts thus would not receive the $295 million in state aid payments that are scheduled to be delivered July 15. They would need to fall back on reserves or borrow to pay for summer school programs.

In the run-up to a shutdown, the Minnesota School Board Association is calling for the continued operation of the Minnesota Tax and Aid Anticipation Borrowing Program. The 18-year-old program gives advantages to school districts that need to borrow for cash-flow purposes.

The Education Minnesota teachers union is urging teachers with expiring licenses to submit their materials for renewal as soon as possible.

Health care provider payments

One of the more surprising exclusions from Dayton’s stripped-down government proposal was funding for those that provide health care to some of the state’s poorest citizens via Minnesota’s network of safety net programs.

The exclusion was surprising, though, not necessarily because of the money but because Dayton’s plan calls for clinics, nursing homes and hospitals to continue providing health care, whether they are paid or not.

That precarious arrangement — the Department of Human Services says it is “hoping” providers will continue to care for those on the plans — has the medical community up in arms. More than five dozen representatives met Thursday in Minneapolis to discuss Dayton’s plan and what, if anything, they can do in response.

“I don’t want to say folks are freaking out, but there’s a lot of concern,” one health care lobbyist said. “It’s very serious.”

A significant turning point will come this week: The DHS will send out an amendment to state HMOs looking to alter their health plans, all of which are currently slated to expire July 1. If that happened, more than half a million Minnesotans on those programs would lose their coverage. Plans will be asked to continue to provide care, but one lingering question is whether the DHS will guarantee retroactive payments once a budget deal is reached.

Dayton’s proposal would keep all currently eligible and enrolled people on the state’s various programs such as Medical Assistance and MinnesotaCare. But at least in the short term, no state or federal money would be disbursed to those tending to the patients.

According to health care lobbyists, that means some providers will close — with their patients’ fate thrown into doubt — and others may be left to go into debt or rely on reserves to weather the storm.

“This is not sort of hyperbole or posturing for the media,” the lobbyist said. “But kids who are home on a ventilator? They probably need to get care.”

Local governments

Minnesota cities are waiting for about $260 million in local government aid (LGA) from the state on July 20. County program aid, payments in lieu of taxes and some other payments are also scheduled to be distributed about that time, said Keith Carlson, executive director of the Minnesota Inter-County Association.

“Probably one of the largest immediate issues,” he said, “is the first half payments of local government aid and county program aid and some miscellaneous payments. Under [Dayton’s] filing with the courts, that would not be made. That’s my reading.”

The shutdown would also affect cities that have local option sales taxes. The money is collected by the state and distributed to the cities that have permission to levy local sales taxes. In nearly all cases except that of Duluth, local option sales taxes are used to pay for capital projects. Cities that use local sales tax revenue to pay for a project like a community center could be in for a complicated situation in making loan payments, said Gary Carlson, director of intergovernmental relations for the League of Minnesota Cities.

“Most cities would have to look closely at debt service payments,” Carlson noted.

Liquor licensing would also be affected. While cities issue liquor licenses, they are subject to approval by the state Department of Public Safety.

Higher education

Along with Dayton’s filing came word that the Minnesota State Colleges and Universities system may be able to stay operational through a shutdown. According to Melinda Voss of MnSCU, the system’s most pressing need is a functional Minnesota Management and Budget office to move its money around. If MMB is open, she says, MnSCU could weather a shutdown into and potentially through all of the fall semester.

But under Dayton’s proposal, the state’s Office of Higher Education (OHE) wouldn’t fare as well. Left with just two full-time employees, the office would be able to administer the SELF loan program (which involves bond ratings and therefore is more critical than other programs) and respond to incidents or “critical” service needs — nothing else.

State grant money would no longer flow to students. The processing of financial aid applications, which peak in July, would grind to a halt. Programs from library resource management aid to college prep summer activities would be put on hold. Even the office’s online application forms would cease to be available; students would have to rely on paper copies in the meantime.

“It’s unbelievable, the things we’re hearing,” said OHE’s Sandy Connolly of the feedback officials are receiving as they tour the state to prepare campuses for a shutdown. Few, if any, students rely on state grants to fund their entire tuition bill, Connolly said. That money is tied to federal Pell Grants, so they’re unlikely to be left completely in the cold.

Still, in a protracted shutdown, the work would only pile up. That means come fall semester, if the budget impasse is broken later in the summer, staffers could be returning to a host of backlogged applications and a monumental task in getting grants back online.

“As each week goes by, there will be a bigger backlog,” legislative liaison Tricia Grimes said. “There will simply be a buildup of volume at a very peak time.”

Timber industry

If the state halts auctions of public land for timber harvesting, loggers would lose access to roughly 30 percent of Minnesota’s total wood supply. Some loggers might have access to private timberland, but the pickings are slimmer in the summer versus winter because of wet conditions.

Wayne Brandt, executive vice president of Minnesota Forest Industries Inc., said timber harvesters experienced tough winter conditions, and a number of mills now have less inventory than expected. “If there is a shutdown,” Brandt said, “then depending on how long a shutdown goes, we believe there will be mills that run out of wood.”

Logging interests are also concerned about the budget for the state Department of Natural Resources that lawmakers will eventually pass. Brandt said the cuts in the environment budget bill that Dayton vetoed would have resulted in an annual reduction of 170,000 cords of wood harvested. The drop would have been primarily the result of cuts in staff to administer timber sales.

Trucking industry

Dayton’s filing with the court requested that truck permitting be continued as an essential service in a government shutdown. But the closing of rest stops is a major concern for Minnesota Trucking Association Executive Director John Hausladen.

Federal law sets limits on how long a driver can be at the wheel before taking a rest. Drivers need a place to legally stop. “You’re either going to be in violation of federal law by driving while tired, or parking illegally,” Hausladen said.

Truckers who haul oversize loads that are heavier or longer than normal loads (like wind turbines) would not be able to get the necessary credentials, Hausladen said.

Construction/excavation

[Sen. Joe Gimse's claims that a) Gopher State One Call is a state service and that b) it would close in a government shutdown are incorrect. See this post for more details.]

Tucked inside the state’s transportation budget under the Minnesota Office of Pipeline Safety is a little-known but nonetheless significant program: Most people know it by the slogan “call before you dig,” the ubiquitous warning for anyone looking to break ground on a project in the state.

The program, formally known as Gopher State One Call, is the service that surveys, marks and approves excavation projects across the state involving anything from planting a tree to erecting the foundation of a building. Under Dayton’s proposed plan, it would cease to operate. It is a nonessential service, according to the plan, but to hear Senate Transportation Chairman Joe Gimse tell it, it is downright critical.

If the program is halted, Gimse said, “All construction will come to an end in Minnesota. The ability of people to continue business of that type would be stopped.”

Since its formation in 1987, the Gopher State One Call service has never gone offline, even during past shutdowns. “You can envision people hitting pipelines,” Gimse said. “We could have a lot of very serious problems.”

Racing Commission

Among the 46 agencies that would be shuttered under Dayton’s government shutdown plan, the Racing Commission is one that has the potential to take thousands of private sector jobs with it.

The Racing Commission — which is responsible for everything from inspections and race officiating to providing veterinary care for the horses — is an integral part of horse racing operations at Canterbury Park in Shakopee and Running Aces in Columbus. If it closes, both venues might as well.

Jeff Maday of Canterbury says a closing would leave more than 1,100 employees without a paycheck, not to mention about another 1,000 who train and tend to the horses but do not work directly for the track.

There is the potential for a long-term impact on horse racing in the state if the shutdown lasts longer than a few days, Maday says. Training and upkeep for horses is expensive, and without the opportunity to race — and make money — it might not take long before owners looked to move their horses elsewhere. And once they move, Maday says, it would be an expensive and difficult proposition to get them to move back after a budget deal is reached.

“At some point, that could happen,” Maday said. “That’s why we’re working on the front end.”

For now, that means working to make the case that the commission should stay open, since the industry pays all the operational costs. Canterbury officials have approached the attorney general and governor’s offices to make their case, but Maday admits there won’t be any clarity until the case is resolved in court.

The Gambling Control Board would also be shuttered under the Dayton proposal. But that probably wouldn’t curtail charitable gambling operations like pull-tabs in taverns. Charitable gambling licenses are granted on a perpetual basis, said King Wilson, executive director of Allied Charities of Minnesota.

3 Responses to “Dayton shutdown plan would spread pain broadly”

1. Stacy Mahoney Says:
   June 17th, 2011 at 10:26 pm

   I can’t believe that Dayton and the Republican’s are acting like such children. I understand that no one wants to see the rich get richer but I don’t want to see the poor get poorer either. This is going to hurt so many people especially children. I don’t know how all of them can sleep at night when all of these families are going to be put out on the streets, families are going to be broken up because the government is going to come in and take kids away because their parents can’t afford to to house, clothe, or feed them, and no one seems to want to look at the bigger picture all they are worried about is making sure that the Republican’s don’t get what they want. Now I am a staunch Democrat and I voted for Dayton but I really think that they all need to grow up and start thinking about everyone that they are going to hurt if they decide to shut down the government.

2. gary hanson Says:
   June 20th, 2011 at 9:57 am

   So instead of working on a solution to stop spending – lets use the age old DEM ploy of the sky is falling – grab your granny and head to the cellar. Those people hating Tea Partiers are on the loose. They will take all your free programs.. we can’t have that. I liken it to the cowardly Taliban who use women and children as human sheilds. And surprise the Union throws in thier 2 cents ( which mind you is about all you would get from them in a shut down.. even though they have been collecting your dues for years) The union has to as the rest of the private sector have kicked their business killing tatics to the curb. But its typical cry baby stuff from the DEMS.. and really has Dayton have no shame in asking for taxes while his family hid for years over in SD to avoid taxes.. really he has a couple of dogs at the state house now. But the problem is he wants others to pick up after their **** too.. we don’t wan to any more. So move to europe up and leave the country to the people that really care for making it the best place.

3. NoBrainer Says:
   June 20th, 2011 at 12:36 pm

   Remember when all those conservative republicans ran under the “jobs is #1″ platform? So where are they now? Sending layoff notices to 40,000 state employees and trying to keep gay marriage not legal. Kudos republicans on all the job creating you have been doing lately!