While the 2008 legislative session was widely praised as the most productive session in recent memory, the 2009 session has received no similar accord.

Granted, we in the legislature and the Governor had a much more difficult budget balancing task before us.  In 2008 we were faced with a budget deficit of around $1 billion.  Everyone agreed that, though it would be difficult, we would be able to balance the budget with targeted cuts designed to minimize the impact on children, the disabled and seniors.  And we did.

However, we entered the 2009 session with a forecasted deficit of almost $5 billion.  That’s about 15% of our entire general fund budget.

State law requires the Governor to present the legislature with his budget, usually by the end of January.  His budget is based on the November budget forecast, which gives him and his agencies about 8 weeks to put a budget together.  From that point the legislature has about 15 weeks to conduct hearings on the Governor’s proposals, find areas of common ground, amend the budget to reflect the priorities of the legislature when they disagree with the Governor, pass a balanced budget and negotiate with the Governor throughout the process on the final content of the budget.

The Governor’s budget-

The budget the Governor submitted to us early on in session contained some shifts in school funding designed to keep our classrooms from being cut (we did find common ground on this proposal), cuts to almost every area of the budget besides K-12 education (we found common ground on many of these as well), and then he included a proposal that surprised almost everyone.  Instead of cutting and shifting a full $5 billion to balance the budget, the Governor stopped cutting and proposed increasing state revenue by borrowing $1 billion so that he could avoid making some of the most painful cuts to some of our most disadvantaged citizens.

While I applauded the Governor’s recognition of the need for some new revenue to avoid cutting some of the programs that serve as a vital lifeline to those suffering from disabilities and/or mental illness, I did not support his plan to borrow money to continue ongoing spending.  In addition to this being 1-time money that would only last through the next 2 years, by borrowing the money, it would obligate the state to an additional $600-800 million in debt service obligations out of the general fund over the life of the loan.  This would require tax increases or further budget cuts in the future to fill the hole it would create.

As it turns out an overwhelming bipartisan majority of legislators agreed with me about the folly of this proposal.  It was rejected by 130 of 134 legislators.

So we went to work trying to put together our budget knowing we were going to need to make an additional $1billion in cuts over the Governor’s proposal, or find an additional $1billion in revenue that had the support of a majority of legislators.

Bad News -

About 4 weeks into the process we received the February budget forecast.  This is the annual budgeting information that we receive which actually shapes the budget we must pass.  The news was devastating.  As a result of the ongoing and deepening recession, state revenues were dropping much faster and deeper than expected.  Our budget deficit had grown by another $1.5 billion.

We were now looking at a $6.4 billion deficit.  And we knew the Governor had only accounted for about $4 billion of it, if you set aside the borrowing proposal the legislature had rejected.

Good News-

The month of March brought us some better news.  The U.S. Congress and President Obama had passed the American Recovery and Reinvestment Act (ARRA, a.k.a. the “Stimulus” package).  Not only would this provide over $300 billion in tax cuts to individuals and small businesses and a huge investment in public infrastructure to improve transportation and put people back to work, but it provided key support for public education, health care and unemployment benefits that actually brought our projected budget deficit back to around $5 billion. 

Our budget-     

Up to this point the legislature had done most of the legwork required to prepare a budget.  Now that we knew exactly what the numbers were projected to be, we took the month of April and the beginning of May to work the bills through the legislative process.

The final week-

In the end, the balanced budget we sent to the Governor in the final week of session had approximately the same amount of cuts and shifts as the Governor originally proposed, and about the same amount of new revenue the Governor proposed.  With 5 days to go we did not know if the Governor would accept or reject our plan.  But, 5 days is an eternity in the legislature. We were prepared to negotiate right up to the constitutional deadline to find a solution we could all agree on.

Decision: Accept and Reject-

At this point, the Governor did the strangest thing.  Instead of continuing to negotiate the differences in our proposal with us, he accepted all of our spending proposals, but rejected our revenue proposal.  By doing this he was deciding that he didn’t want to negotiate with us anymore.  With 5 days left in the legislative session he more or less sent us home and decided to go it alone with a plan to make unilateral cuts to the budget through a rarely used process called “unallotment.”  In doing so, he took his initial proposal to raise $1 billion in revenue off the table and made an additional $1 billion in cuts that he had never proposed in his original budget.

It is unfortunate that the Governor chose the path he did.  I think the people who elect us to serve this state expect the House, the Senate and the Governor to work through their differences honestly and openly and to find solutions to the challenges we face together, not unilaterally.  The fact remains we did pass a balanced budget.  And, we were prepared to work day and night to negotiate an agreement with the Governor if he had been willing to continue to work with us those last 5 days.

Epilogue (Supreme Court)-

In May of 2010 the Minnesota Supreme Court handed down a decision that the Governor acted illegally with his “unallotment” decision.  That gave us just 2 weeks to fix an almost $3 billion deficit.  We did so by accepting much of the Governor’s proposals—but only for this biennium—and still protecting nursing homes and K-12 education.  We also enacted into law an opportunity for this Governor or the next to bring $1.4 billion in federal tax dollars back to Minnesota to support our hospitals and save jobs.  With Fairview Ridges being the top private sector employer in Burnsville, I think we all hope the Governor takes advantage of this excellent opportunity to bring more of our own tax dollars back to Minnesota.