Last week, the state Supreme Court agreed to take up the case challenging the Governor’s unallotments. Now we can add the outcome of this case to the list of issues complicating the upcoming legislative session (already on the list: budget deficit and cash flow problems). Here are the facts of the matter:

The unallotment: The 2009 session ended with a stalemate over fixing the budget deficit. Governor Pawlenty didn’t call a special session, instead using unallotments to the tune of $2.7 billion to finish balancing the budget.

The court case: Back in October, six disabled and low-income Minnesotans filed a lawsuit challenging two of the unallotments. First, they challenged the elimination of the Minnesota Supplemental Aid-Special Diet (MSA-SD) program, which provides cash supplements to disabled Minnesotans whose health conditions require them to follow strictly prescribed diets. There are no other resources available to help them get the food they need. They also challenged the unallotment of the Renters’ Credit, which provides a property tax refund to low- and moderate-income renters in Minnesota. 

The case essentially involves two issues:

• The first issue applies to both the MSA-SD program and the Renters’ Credit. The question involved is whether the unallotment statute could be used at all to balance the budget because the amount of the budget deficit was known (not “less than anticipated,” as the statute reads).
• The second issue is narrower and only applies to the Renters’ Credit. If the unallotment statute can be used, it only allows the Governor to reduce appropriations. It does not allow the Governor to rewrite the statute. The Renters’ Credit statute says that 19 percent of rent is the amount of property tax paid for the purposes of calculating the Renters’ Credit. When the Governor unallotted the Renters’ Credit, instead of reducing the amount of funds, he changed the amount of property tax paid to 15 percent – effectively changing the statute.

The court’s decision: In late December, Ramsey County District Chief Judge Kathleen Gearin ruled that the unallotment statute could not be used because the budget deficit was neither unknown or unanticipated. She also ruled that the Governor’s use of the statute violated the separation of powers doctrine. As a result, she issued a temporary restraining order requiring the state to reinstate payments under the special diet program. The order is now on appeal.

Judge Gearin’s order did not address the Renters’ Credit unallotment. The Department of Revenue website has already issued instructions related to the Renters’ Credit that implements the Governor’s unallotment orders.

The next step: The Minnesota Supreme Court has agreed to hear the case. The Governor must submit his brief to the Supreme Court by February 9, the plaintiffs’ must respond by February 23 and the Governor may respond to the plaintiff’s brief by March 2. Oral arguments are scheduled for March 15.

The Supreme Court has the authority to overturn all of the Governor’s unallotments – not just the two challenged in the original case. So, until we know how the Supreme Court rules, we really don’t know what the implications will be for our state’s budget deficit. The Supreme Court will not hear oral arguments until mid-March, and it is very possible that they may not deliver their verdict until after the session ends on May 17.

-Christina Wessel and Scott Russell

Posted in Budget Process, unallotment