Wednesday, May 13, 2009

Could “lights-on” bill mean “lights-off” for Minnesota city governments?
A piece of legislation introduced this week (Senate File 2141)—a so-called “lights-on” bill-- would keep state government operational beyond July 1 even if an appropriations agreement is not reached among Governor Pawlenty and Legislative leaders prior to that date. SF 2141 is being debated by the House-side this afternoon.

Under the proposed bill, it is not entirely clear, though, how city programs including local government aid (LGA) and market value homestead credit (MVHC) would be treated. If the legislative session ends without resolution to the state budget, LGA payments and MVHC reimbursements,--and the services they fund-- could be at risk. Unlike budget solutions enacted by the legislature, the Governor has far fewer tools to address a budget imbalance and he would most likely have to rely on the use of his power to unallot appropriations, just as he did with LGA and MVHC in December of 2008. Under the State’s unallotment statute, the Governor can either reduce appropriations or defer payments in order to address a budget shortfall.

In a worst case scenario, the “lights-on” bill could force the Governor to balance the remaining $3.1 billion deficit through cuts and shifts. If he uses his power to delay the payment of $1.8 billion in school aids as proposed by the House, the remaining deficit would still be $1.3 billion, which might have to be made up through program cuts— likely including cuts to LGA and MVHC.