Statutory puzzle: Are unallotments temporary or permanent cuts to base budgets?

There’s a great deal that remains unclear following the end of the 2009 legislative session on Monday, but one thing is abundantly evident. Minnesota’s longstanding structural budget deficit has been kicked down the road once again.

Gov. Tim Pawlenty has pledged to deal with the deficit that remains after his line-item vetoes through unallotments. Just how steep Minnesota’s structural deficit will be when state government takes up its next biennial budget two years from now depends partly on how one reads the unallotment law.

The sense around the Capitol and in the media is that unallotments constitute temporary budget reductions in time of emergency, and hence do not affect the base budget. But according to the 2008 House Research paper on unallotment that Pawlenty reportedly relied on in plotting his budget solution, that question really isn’t addressed in unallotment law.

From page 14 of the House paper:

It is not crystal clear how an amount that is unalloted in one biennium should be reflected in an agency’s base budget when the governor submits a budget for the next biennium. On one hand, the statute defines the base as the "amount appropriated." A literal and probably the best reading of the statute would exclude the effect of unallotments. The amount appropriated generally would be the amount specified by the law (i.e., before any reduction under the unallotment statute). Moreover, the reference in the [statute] to "policies of the commissioner" would appear to allow latitiude for the governor to separately treat an unallotment as an adjustment to the base, but one that must be shown separately [in the governor's submitted budget]. However, because unallotments are not explicitly referenced, it could be argued that the governor can treat them as, in effect, adjustments to base appropriations. This may be a plausible interpretation if the statute is viewed against the backdrop that the budget is essentially the governor’s presentation to the legislature and, thus, the legislature may have intended to give the governor broad discretion in applying its requirements.

So the authors of the House Research backgrounder think there’s a stronger argument for the case that unallotments don’t change the budgeting base, but room for doubt on that score means there’s an opportunity for Pawlenty to assert that his unallotments are permanent cuts.

PIM has contacted the governor’s office to ask which interpretation they’re embracing. I’ll update when they respond.