Guest Column by Phil Krinkie

With just three weeks before the end of the current state funding cycle, the likelihood of a state government shutdown looms large.

The Capitol hearing rooms are dark and few if any legislators can be found in the hallways. Soon layoff notices will be sent to more than 35,000 state workers. As of July 1 they will be instructed not to show up to work, unless directed to report to perform critical service during a government shutdown.

The only previous shutdown in state history was for eight days in 2005. Interesting the budget deadlock in 2005 was over the same issue that has caused this year’s impasse; a fourth tier income tax on Minnesota’s top income earners. Once again at the center of this budget battle is the question of; how much is enough in terms of state spending growth.

The February budget forecast is the benchmark for setting the next two year budget which starts on July 1. In the February forecast the state’s estimated general fund spending increases by $8.9 billion or 29.4 percent over the next two years, if nothing is changed in current law. The one thing all sides have agreed on is that a 29 percent growth in state spending is not acceptable, let alone sustainable. But, this appears to be where the agreement ends.

The Republican-controlled House and Senate passed and sent to the governor a balanced budget that increased general fund spending by almost 4 billion or 12 percent above the funding levels in the last budget.

They had hoped that Gov. Mark Dayton would find this overall level of spending adequate and then start to negotiate the specific spending targets in each separate area of the budget.

But the governor never budged off his proposal to increase spending by 23 percent, paid for by his marquee campaign issue, a massive $3.6 billion tax increase on Minnesota top income earners, at a rate of 10.95 percent.

Only in the waning days of the legislative session did Gov. Dayton suggest that he would alter his position and change his income tax proposal to start at an income level of $250,000 instead of $150,000. His offer was too little and came too late in the process. The Republican-controlled Legislature passed a $34 billion funding package and upon receiving their appropriation bills, Gov. Dayton vetoed each and every one. So what happens now?

First it will be up to Gov. Dayton to decide when to call a special session. He could call legislators back to the Capitol sooner, rather than later, hoping they will agree to his tax increase, just so they can go home. The governor could also wait, hoping that legislators will feel mounting pressure from state workers and constituents pleading to get a deal done. Regardless of when the governor calls a special session, Republican lawmakers believe they have already compromised by passing a budget that increases spending by $4 billion or 12 percent above the previous budget.

On the other hand Gov. Dayton’s desire to raise income taxes on upper income earners seems to be more than just a way to resolve the budget stalemate. Dayton gives the impression that there is a moral obligation for top income earners to pay more.

If this is indeed the governor’s position it could lead to a protracted state government shutdown. Last week Gov. Dayton said, “I won’t negotiate spending reductions until they’re willing to negotiate revenue increases.” With statements of that nature, it appears the two sides are positioning for a long debate on the issue of a “tax increase.”

If this standoff on the budget continues past July 1 without an agreement to continue government operations at some level, there could be serious consequences for Dayton.

Should Dayton continue his all-or-nothing strategy over a tax increase, he could actually hurt the people he is trying to help.

A shutdown could leave thousands of people without state services and send tens of thousands of state workers to the unemployment line, if it’s still open. At this point it is a wait and see situation on a day to day basis, as the showdown to shutdown continues.

Phil Krinkie, a former eight-term Republican state rep from Lino Lakes who chaired the House Tax Committee for a while, is president of the Taxpayers League of Minnesota. GOP Gov. Tim Pawlenty appointed Krinkie to the board of the MinnesotaStateColleges and Universities system. You can contact him at: philk@taxpayersleague.org.