Major players reluctant to join unallotment fray

Their worry: Where’s the upside?

The immediate consequences of last week’s court ruling that Gov. Tim Pawlenty overstepped his authority in unilaterally cutting the state’s budget last year could hardly be simpler: The temporary restraining order restores $5.3 million to a nutrition program aimed at poor people.

But the order, issued by Ramsey County District Court Judge Kathleen Gearin, could produce a chain reaction of similar challenges that would complicate efforts to deal with the state’s systemic budget deficits in years to come.

That’s because the judicial reasoning employed by Gearin - that Pawlenty wrongly usurped the powers of the legislative branch by authorizing the cuts to the nutrition program - could be similarly applied to all $2.7 billion in so-called unallotments. The judicial decision raises the possibility that additional constituencies will be emboldened to file lawsuits seeking financial redress for the governor’s actions.

And some affected parties are clearly interested in doing so. “Judge Gearin’s decision is a clear indication of judicial precedent on this issue,” argues Mike Dean, executive director of Common Cause Minnesota. “It’s clear to say that Gov. Pawlenty overstepped his bounds, that this really is an abuse of power. … I think everyone is examining how this impacts them and I think makes them much more likely to file suit.”

Common Cause is considering legal action over the dissolution of the state’s political contribution refund program, which allowed residents to be compensated for donations of up to $50 to candidates. The group is still weighing whether resurrecting the program would be more easily achieved through litigation or legislative action. “That’s what we’re having conversations with our attorneys about,” says Dean.

But Pawlenty has indicated that he intends to appeal Judge Gearin’s decision, meaning any legal clarity on the issue is likely to take time. And so far the constituencies most severely affected by the unilateral budget cuts seem to be proceeding cautiously.

That’s likely because the court order - even if it’s upheld on appeal - doesn’t change a fundamental fact: The state is broke. Whether Pawlenty overstepped his authority or not, Minnesota’s still facing an additional $1.2 billion deficit in the current two-year budget cycle and a projected $5.4 billion budget shortfall in the following biennium. This means that many interest groups that might have challenged the governor’s budgetary authority are reticent about getting involved in litigation.

“The decision intrigues me, but it also scares the heck out of me,” says Gary Carlson, director of intergovernmental relations at the League of Minnesota Cities. “I think the challenges it creates for the governor and the Legislature are just immense.”

The League of Minnesota Cities has considered filing a lawsuit against the Pawlenty administration over cuts to the state’s Local Government Aid program. But according to Carlson, the group’s board of trustees has so far determined that there’s little upside to such a move given the state’s fiscal woes.

“What would be the remedy?” he asks. “That’s where it gets very dicey. You could spend hundreds of thousands of dollars in litigation only to end up pretty much right where you started.”

The Association of Minnesota Counties has reached an identical conclusion. “To spend public dollars to sue the governor and the state, who will defend themselves with public dollars, probably isn’t a good idea,” says Jim Mulder, the group’s executive director. “Even if you win it’s a hollow victory, because that doesn’t create any new money.”

K-12 education took potentially the biggest whack in Pawlenty’s unallotment edict, with $1.7 billion in such spending cut from the budget. But because the reduction was pitched as an ad hoc payment shift - with (verbal) promises that it would eventually be paid in full - many education groups were quietly content with the deal. Therefore any talk of filing a lawsuit contesting Pawlenty’s authority to enact such an accounting shift has been largely muted.

“Have we thought about jumping into the litigation pool? We haven’t,” says Scott Croonquist, executive director of the Association of Metropolitan School Districts. “I don’t see us going that direction, either. We don’t see in the end that the outcome for education would probably be vastly different simply because of the state budget situation.”

But education advocates hardly feel secure about the funding situation for the current biennium. They want to see that $1.7 billion in payment shifts enshrined in state statute so that repayment can’t be ignored down the road. Because both the Pawlenty administration and some DFL leaders have professed support for the accounting move at times, it’s deemed a (rare) potential area for budgetary compromise.

“We’re already kind of working quietly to encourage the governor and the Legislature to somehow come together on this thing,” says Charlie Kyte, executive director of the Minnesota Association of School Administrators. “The animosity between the parties may make this real tough to come about.”

Indeed, education advocates fear that a deal guaranteeing that the $1.7 billion will eventually be repaid could ultimately still be scuttled by partisan animosities at the Capitol. In particular, the thorny relationship between Pawlenty and Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, who has voiced skepticism about such an accounting shift, could prove troublesome.

“This is kind of like the North Koreans and us negotiating,” says one education insider of the frosty relationship between the two politicians. “We’ll just have to wait and see how it works.”

The ultimate ramifications of Gearin’s ruling are impossible to parse at this point, and there are no further hearings on the lawsuit scheduled until March. But at the least, it provides another potential budgetary obstacle in what’s undoubtedly going to be a turbulent few years at the Capitol.

“As bad as this session will be,” notes Mulder, of the Association of Minnesota Counties, “we are facing what I believe will be the most difficult session in the history of the state from a budgetary perspective in 2011.”