Wednesday, June 29, 2011

Minnesota’s Budget Battle: Assessing Gearin’s Decision

“It’s time you did your job.” Essentially this is what Judge Gearin stated today in her ruling that only core functions will receive core mandated funding. In reaching that decision she took a minimal view of the role of the courts in resolving the budget dispute, clearly placing the responsibility on the governor and the Republican legislative leadership to reach agreement. But how do we read Gearin’s order, as well as the one yesterday, ordering funding for the state court system, in terms of what it means for Minnesota and the different players in budget battle?

Comparing 2005 and 2011

In 2005, seven of the budget bills did pass the legislature and were signed by the governor. They excluded K-12, Health and Human Services (HHS), and transportation. Those three bills accounted for about 70-75% of the state budget. Thus, the seven bills that passed before the shutdown accounted for about 25-30% of the state budget. Once you throw in the judge's order for temporary funding you probably had 90% of the state budget addressed. For the most part most of the functions of the state were covered.

This year one of ten bills was passed and signed into law. The one bill signed in to law, the agriculture bill, accounts for about 1/2 of 1% of the state budget. Thus, 99%+ of the budget was not adopted or agreed to by the governor and legislature. As of yesterday with the court decision to fund the courts, approximately another 3-4% of the state budget is addressed. This still leaves about 95% not covered.

Judge Gearin’s decision is minimal. It covers core state constitutional functions, programs mandated by federal law, and some additional funding for health care and to keep the animals at the zoo fed and safe. Additionally, funding to school districts and local governments, to the extent already obligated, must be paid. Gearin’s order is largely consistent with what I argued in a Minnpost piece from June 9, 2011 .

Given Gearin’s order, what percentage of the state budget will be addressed by it? It is difficult to ascertain from the order how much of K-12 gets funded. The same is true regarding the state HHS funding. These are the two largest pieces of the budget and constitute about 70% of the budget. Estimates are 80% of K-12 are covered. If K-12 is 40% of the state budget then about 32% of the budget is covered here. In terms of Health and Human Services, assume also about 3/4 covered. If HHS is 30% of the state budget then that is about 23% of the state budget. Add in local government aid (LGA) which is about 9% of the state budget. Most of that is covered by Gearin's order. Assume 90% is covered and that is another 8% of the budget. Finally add to that funding for core administration of the executive branch and public safety about another 7%. In total Gearin's order mandates funding for about 70% of the state budget., Add to that the current 5% covered already with the agriculture bill and the funding for the courts, then maybe 75% of the state budget has been addressed.

The Gearin order also suggests that most of the 36,000 state workers are out of work on July 1. An estimate is 23,000 lose their jobs. The real issue becomes how many state workers are needed to work the prisons, provide medical care, and perform core public safety and other functions. No question the Minnesota unemployment rate takes a major hit and goes up dramatically on July 1.

Legal Analysis

There were legal winners and losers in the Gearin decision, as well as in the Tuesday one on court funding issued by Judge Christopherson.

Governor Dayton appears to be a legal winner in that Gearin sided with him on a minimalist interpretation of what will be funded. However, Dayton did not win everything. He did not win the mediation and he also did not win in his argument that the case was not ripe for review and that the court should not issue an order. The Court implicitly rejected Dayton’s argument that he had inherent executive authority to act and therefore the Court should not.

Conversely, Attorney General Swanson and many organizations seeking to have their definition of core state function funded lost. Horse racing, continuing construction projects, and keeping zoos open, while nice, are not essential. Gearin offered reasonable legal arguments, seeking to balance Article XI of the Minnesota Constitution (No money shall be paid out of the treasury of this state except in pursuance of an appropriation by law”) with the Federal Constitution’s Supremacy clause with Article III of the Minnesota Constitution (separation of powers). Essentially she said yes, appropriates and the budget need to be handled by the legislature and the governor as required by Articles III and XI, but these clauses must also be read in light of the requirements of the Supremacy Clause and separation of powers so as not to threaten the constitutional duties of the executive branch. While Swanson made good legal arguments, Gearin construed her powers narrowly in order to respect the powers of the other branches.

The House and Senate Republicans lost legally similarly to the Attorney General. Yet the biggest losers were the four Republican senators who argued first to have the court order the governor to call a special session and then to declare that Article XI precludes any judicial orders to maintain temporary funding. The core of their argument was a wooden reading of Article XI that seemed to assume only the legislature can order funding “by law.” Gearin rejected that argument by appealing to the Supremacy clause and by asserting that respect for separation of powers required and permitted court action.

Judge Christopherson also rejected this reading of Article XI. He too appealed to the U.S. Constitution and the State Constitution to make his claims. But also in a section of his decision entitled “reconciliation” he contended that this clause has to be read in light of other clauses of the State Constitution and not as stand alone. It was necessary to do that to give meaning to the entire Minnesota Constitution and not just part of it. More or less, this was again the argument I made in my Minnpost piece. In short, the a core legal argument that Republicans have been using in battles or court-ordered funding for abortion and in other budget battles, was rejected.

Last Thoughts: Political Winners and Losers

Simple: Dayton wins the political-legal battle and has a strategic advantage over the Republican legislature. Dayton has new leverage to use in negotiations, with voter ire taken out in 2012.
Of course, Minnesotans lose here. A second shutdown in six years, a loss of services, and embarrassment nationally as a state that cannot get its work done.

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