“The big lesson from Minnesota is that the unthinkable is possible. You have a tendency to think in these sorts of situations it’s just a game of chicken, that there will be a resolution, that the debt ceiling will be lifted. But sometimes a game of chicken ends in a car crash.” - Lawrence Jacobs, political scientist
Let’s talk about Minnesota.
I know that might not sound very appealing, with all the debt deal drama on the Hill and GOP presidential hopefuls signing outrageous pledges and Posh Spice naming her kid something super wacky.
But this is a big deal. It’s a story we need to talk about and watch closely. On July 1, after Governor Mark Dayton and the Republican-controlled legislature failed to reach a budget agreement, the state government shut down. Here’s a quick roundup on how the shutdown happened.
The shutdown is now entering its second week. This is the longest state government shutdown in almost a decade, according to the National Conference of State Legislatures. Here’s what else you need to know:
How often are negotiations occurring? Since the government shut down on July 1, the governor and state GOP leaders have met twice, each for less than 30 minutes. As of Monday, July 11, no new negotiation talks have been scheduled. [AP]
Governor Dayton has offered two proposals since the shutdown. Both were turned down by Republican leaders. One proposal involved temporarily raising taxes on Minnesotans making over $1 million per year. The other deal involved increasing the cigarette tax by $1.00 per pack. During Minnesota’s last government shutdown - which lasted eight days - then-governor Tim Pawlenty agreed to a similar, new cigarette tax in order to solve the budget impasse. [NY Times,POLITICO, WaPo]
An independent, bipartisan panel - created by former VP Walter Mondale and former Minnesota Governor Arne Carlson - offered another proposal. The panel, made up of former state legislators and business leaders, proposed a budget plan which would close the budget gap by relying on 70% in spending cuts and 30% in revenue increases.
Senate Majority Leader Amy Koch ruled out the report before it was even released, saying, "If tax increases come out of that plan, that’s not going to happen." Governor Dayton said tax increases should only apply to Minnesota’s wealthiest citizens. [WSJ]
Some state Republicans are open to increasing revenue. MinnPost has the list of proposals some conservative lawmakers are willing to discuss, ranging from an HMO profit cap to expanding the state sales tax to online purchases.
What are the consequences of this shutdown? Approximately 22,000 state workers have been laid off. As part of a deal between legislators and state unions, these state workers will receive unemployment benefits because they were laid off rather than furloughed.
Families that rely on state subsidies for day care services are also feeling the burden. According to the New York Times, “about 21,000 families with a total of 37,500 children in Minnesota receive day care subsidies that pay about half of the cost of child care at centers or in private homes. An additional 4,000 families are on a waiting list.” To put that into perspective: a parent of two without this subsidy will end up paying $300-$400 per week for child care.
No one knows exactly how much the shutdown will cost. Why? The employees who calculate those totals have been laid off. [NY Times]
One thing we do know: the shutdown will cost the state. Here are some revenue loss calculations you need to know, courtesy of WaPo:
- $52 million per month: The amount of tax revenue the Dept. of Revenue will lose every month the government is closed.
- $1.25 million per day: Lottery sales.
- $200,000 per day: State park closures
- $40,000-$50,000 per week: Uncollected tolls
Other fees are not being collected, including parking fees (Dept. of Administration) and licensing fees (Dept. of Education and Dept. of Health). The state is also facing higher unemployment benefits for those state workers who were laid off.
Some services are still up and running. Services deemed critical are still operating, including courts, prisons, the highway patrol, food stamp programs and emergency road repairs. On the flip side, over 100 construction projects have stopped, 66 state parks are closed, and 84 highway rest areas are inaccessible.
Other services may start operating again before a budget deal is reached. Governor Dayton has asked a state judge to consider funding other services while the government is shut down, including “special-education aid, addiction and mental health services, services for people with HIV and victims of domestic violence, sexual assault and other crimes.” [WSJ, AP, WaPo]
While 22,000 state employees are home without a paycheck, 138 state legislators still see the money coming in. 48 representatives, 14 senators and the governor turned down their paychecks. According to the Star Tribune, that leaves 65% of Democratic members and 75% of Republican members collecting their paychecks.
Looking for work elsewhere: Some laid-off state workers are turning to job openings in other state governments or exploring the private sector. One man, a single father who has lived in Minnesota his entire life, told the Associated Press, “When the state government treats their employees like this, I don’t need to be part of it.’’
What differences remain in the budget deal? It’s not just surrounding tax hikes. Differences remain on education spending and Health and Human Services spending. Minnesota Public Radio has a great breakdown on these and other policy differences.
[Photo: Protesters hold signs during a rally at the Minnesota State Capitol in St. Paul, MN, on July 6, 2011. Credit: Carlos Gonzalez/AP]