Then and now: Looking back at the Quie-era fiscal crisis of the ’80s

At the Capitol and in the media, everyone who has reached for a precedent for the current Minnesota budget crisis has hearkened back to the recession of 1981-82 and the perpetual state of emergency it created for then-Gov. Al Quie (pictured) and the Legislature. Yet aside from a few generalized memories–the Republican governor who broke his no-new-taxes promise and renounced re-election, the endless special sessions, the eventual "three-legged stool" solution of spending cuts, tax increases and cost shifts–it’s hard to find many details about what happened back then in the press or on the web.

Fortunately, though, the Legislative Reference Library has produced a very useful, if brief, list of resources on the ‘81-’82 debacle. LeeAnn Schutz’s narrative account from Session Weekly is very good. Even more useful for the wonks in the house is Charles Sederberg’s "Chronology of Minnnesota’s Fiscal Crisis July 1, 1979 through December 31, 1982."

A couple of points leap out immediately from the Sederberg timeline (and these numbers, aside from the percentage calculations, are all his):

• The current structural deficit is substantially more grave than the Quie-era deficit. In 1981-82, Minnesota faced a $767 million deficit on a budget initially forecast at $8.7 billion, or an 8.8 percent shortfall. (Later, a revised state forecast in December 1981–that biennium’s equivalent of the forecast that will be issued in November 2009–raised the deficit estimate to $869 million.) Today, although the net deficit figure of $4.57 billion is the one everybody refers to, the total gross deficit when one-time federal stimulus dollars are left out is $6.4 billion of a budget that was initially forecast at $36.7 billion–or 17.4 percent.
• Tax increases constituted the lion’s share of the Quie-era fix. Before all was said and done, tax increases were enacted in three of the six special sessions that occurred in ‘81-’82. The first set, which came in the June 6, 1981 special session, totaled $587 million, or about 77 percent of the $767 million deficit that was forecast at the time. The second round, enacted in the special session that started on December 1, 1981, came to $317 million more in new taxes. The third volley, arising from the December 7, 1982 session, added another $110 million in new revenue.

One Response to “Then and now: Looking back at the Quie-era fiscal crisis of the ’80s”

1. Anonymous Says:
   March 26th, 2009 at 10:46 am

   Great work, Steve. Thanks for helping us wonks.