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Minnesota Government Update


May 16, 2009


Ultimatum on State Budget: No Special Session
Governor Tim Pawlenty announced Thursday afternoon that he would utilize his executive powers of line-item veto and unallottment to singlehandedly balance Minnesota's $4.6 billion deficit if a compromise cannot be brought to the table before the May 18th Constitutionally mandated adjournment deadline. The unusual flexing of executive power seemed clearly designed to put pressure on the House and the Senate as the clock ticks toward the end of this year's legislative session.
 
Pledging that there would be no government shutdown or special legislative session, Governor Pawlenty stated that he would sign the DFL sponsored bills on his desk, and that every bill sent to him would be subject to his line-item veto. Pawlenty said he would use his executive powers to address a $3 billion disparity between expected spending in the DFL bills and anticipated revenues. Pawlenty stated at a Capitol news conference: "There is a key principle at stake here. You can't spend more than you have. The DFL-majority just did that...In these economic times, the people of Minnesota want to see decisive action. We're going to take action to make sure this session ends on time with a balanced budget."
 
The process of unallotting, through which a governor essentially de-funds a program, could have an enormous impact on cities and counties, which depend on state funding called Local Government Aid (LGA), as well as subsidized health-care programs, which Pawlenty has targeted for larger reductions than the Legislature approved.
 
On Thursday night, Governor Pawlenty used his line-item veto to strike $381 million for the General Assistance Medical Care program for childless adults in fiscal year 2011. The other line item vetoes were smaller ones to an economic development bill, ranging from $1.2 million to bring film productions to the state to $280,000 to help Minnesota Public Radio convert its signal to digital.
 
The unallottment process would begin July 1st, the beginning of the next fiscal year. Pawlenty said his budget for the next two years would likely come in slightly above $31 billion, compared with the current projected budget of $34 billion. Controversy is stirring over the fact that Pawlenty nor his cabinet have specified what or where cuts would be made.
 
House Speaker Margaret Anderson Kelliher called Pawlenty "Governor Go-it-alone." The DFL Party released a statement labeling Pawlenty as "King Tim." Kelliher and House Majority Leader Tony Sertich demanded that Pawlenty begin to make public negotiations and statements to make this process more transparent. The Governor did not accept the Speaker's and Senate Majority Leader's invitation to have public discussions about the Governor's decision in the Legislative Commission on Planning and Fiscal Policy; instead, Office of Management and Budget Director Tom Hanson was sent as the Governor's Chief Negotiator with little or no details to offer the Commission.
 
Pawlenty's budget proposal, Kelliher said in a letter to the governor, will throw more than 113,000 people off health care and could possibly cut upwards around 20,000 jobs. Kelliher posted that unallottment has only been used 5 times in the State's history, and Pawlenty's would be 10 times larger than any other previous unallottment by a Minnesota governor.
 
Much action can be expected in the final days of the session. The House and Senate could mount an effort to override Pawlenty's veto of a $1 billion tax bill they passed a week ago. In the House, the majority DFLers would need at least three Republican votes to succeed, and Pawlenty said he was confident the GOP would hold firm. He said he has been talking daily with GOP House members to ensure their backing.
 
Pawlenty's decision to use line-item vetoes and unallottment in the absence of a budget deal carries political risks, as the governor might end up shouldering all the resentment of the interests that suffer cuts. As late as Wednesday night, House Minority Leader Seifert dismissed the idea, in a Capitol press conference, of Pawlenty unallotting, citing the political implications.
 
Homeowner-Warranty Bills Pass Through the House, Senate
Several homeowner-warranty bills are moving through the Legislature that would enable homeowners who prevail in a construction-defect lawsuit to recover their attorney fees, and would amend the state's existing home-warranty law to give homeowners more time to pursue a construction-defect claim under the state's home-warranty law, and eliminate the need to notify the builder in writing of an alleged defect, among other things.
 
The Builders Association of Minnesota has testified against most of the changes, saying the existing home warranty law is adequate. Those opposed to the bills argue that the mandates will hurt the construction business in Minnesota in times of severe economic instability for the industry. "If passed, these [bills] would do nothing but harm an industry in dire straits," BAM noted in a May 11 release. "The unemployment rate in residential construction is close to 50 percent and builders are going out of business."
 
After some negotiations with the bills' authors, the builders association agreed to be "neutral" on the bills. The negotiations resulted in some language changes that made the bills more palatable to the builders.
 
Other bills that passed the House floor would: allow homeowners to notify their builder of a construction defect by phone or other means (eliminating the "written notice" requirement); give homeowners a year to notify their builder of a problem (instead of the current six months); and give homeowners more time to pursue a warranty claim under the home warranty law's statute of repose.

For up-to-date information about the Minnesota Legislature, tune into Almanac: At the Capitol. This lively and informative program is aired Wednesdays during the legislative session on Twin Cities Public Television at 7:00 PM on Channel 17 and at 10:00 PM on Channel 2.
 
Almanac: At the Capitol is seen on all public television stations throughout Minnesota and in Fargo. Winthrop & Weinstine is the exclusive law-firm partner and a sponsor of the program.
 
For more information and to see previous broadcasts, check out the Almanac: At the Capitol Web site at http://tpt.org/aatc/.
 
 
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