Government shutdown one year later: Reforming the Minnesota budget process

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It is now the one year anniversary of the Minnesota government shutdown and proposals are flying off the shelf regarding what needs to be done to avert future budget impasses. Solutions range from cutting off legislative pay to exempting certain organizations from the shutdown (the zoo and the state lottery) to even saying that simply creating one party government (vote DFL and throw the bum GOP out this November) is what is needed. All these are worse than band aid solutions; they really are going after the symptom and not the cause.

The real problem is the flawed budget process in Minnesota. It is a process built for the horse and buggy days trying to operate in the 21st century. Government is so much more complex, the budget numbers so much larger, the functions more diverse, that it is perhaps impossible to reach consensus and make decisions between the beginning of January and ending on the first Monday following the third Saturday in May as specified by the State Constitution. These are deadlines from the nineteenth century and reflect a different era for the state. There simply may not be enough time to do the budget by law in the 21st century.

But think also how flawed the current budget process is right now. We have elections in November, The state then receives a fiscal forecast at the end of November telling the governor what the economic assumptions and budget situation in the state will look like in the coming months. The governor then finalizes a budget premised on these assumptions. If there then is a new governor (as there was in 2010) then the new governor when he takes office finishes the budget of the old governor.

Now the new legislature comes to work in early January and then it waits until late January or so for the governor to release the budget. Then they all wait until late February for the updated fiscal forecast. Thus, it is really not until late February or March that the work on the budget commences. And even then, there are separate hearings in the House and Senate, forcing conference committees to act. The budget also is really ten separate bills, with spending distinct from taxation, and no real work gets done until there are agreements on the different spending targets for each of the areas such as HHS, K-12, and so on.

Sound confusing? It is. It is also inefficient. At least two months are wasted at the beginning of every budget cycle waiting for the governor’s budget, the fiscal forecast, and then agreement on budget targets. Now add more wrinkle–budgets are created right after state elections when often many new legislators or constitutional officers are elected. They are green, often learning on the job while creating a new budget. This is what happened in 2011 after the 2010 elections. The same will be true in 2013 when the 2012 elections produce a legislature with at least 25% of the legislators being new. These new legislators are barely in office, barely understand the state government when they are asked to review the budget. This makes no sense. In a distant past when life and budgets were less complicated (and smaller), perhaps it was possible to do all this with a part-time citizen legislature. But those days have passed. A new budget process is needed, with new time lines and ways to move the work along.

Is there a better way to do the budget? For nearly a decade I have argued that the current budget process is backwards and that a new mechanism is needed. Many of these reforms are found in our neighbor state of Wisconsin. What are these reforms?

In Wisconsin there is a joint House (Assembly) and Senate committee that does the budget. It is one bipartisan committee and not separate committees in the two chambers as in Minnesota. Second, there should be one budget bill and not ten separate ones as is currently the case in Minnesota. Moving to create one budget with one committee primarily but not exclusively responsible for it is a necessary correction and centralization to the highly decentralized process that currently occurs in Minnesota. Additionally link budget and tax bill together. Spending and revenue need to be connected.

But in addition, one of the best ideas from Wisconsin is that of an automatic continuing resolution. By that, if the budget is not passed on time in Wisconsin then the existing budget continues in force until the budget is agreed to. This reform alone would prevent a shutdown.

There other possibilities for reform. One would be to pass the Truth in Budget Act. It would do two things. First, it would undo the current asymmetry or stupidity in the law that counts inflation for the purposes of revenue but not obligations in Minnesota. This law dates back to the 2002 when Roger Moe and Tim Pawlenty, in running for governor while they were still in the legislature, creating the gimmick to avoid having to deal with the real budget problems during the election. The Truth in Budget Act would also ban spending shifts (shifting spending obligations past July 1, to push the matter off in the next budget year) and “borrowing” from schools and other entities with the false claim of paying them back in the future. These are truly gimmicks.

But even other reforms could take place. Why should the legislature do the budget in the odd years right after the election? Why not move the budget year to the even years and give legislative members a year to learn about the state government before tacking it? Other possibilities include changing the timing of the budget, or when the legislature is called into session. Instead of the legislature coming into session in early January, then waiting for the governor’s budget and then the fiscal forecast, change the timing of one or all of these to create a process that makes more sense.

The point here is that there are many ways to fix the budget process to avert future government shutdowns. The proposals being floated now will do little to correct the process. Broader structural changes, such as those described here, are needed and can work.