The State of Minnesota is starting to look more and more like a bad credit risk. If you need proof, take a look at HF 3741, Gov. Tim Pawlenty’s proposal to deal with a looming cash flow problem that could keep the state from paying its bills.
Introduced last week, the bill allows the state to put off paying the University of Minnesota from the 21st to the 25th of every month, even as it requires large state sales tax generators to pay more of their estimated taxes earlier in the month and forces counties to pay state property taxes to the state a month earlier than current law mandates.
These things are necessary, State Budget Director Jim Schowalter said, because the state currently has no cash reserves and payments could bring the state down to $0 in its general fund balance.
That’s a situation people in business refer to as being “cash-poor,” but I’ve also heard it called being “dead-ass broke” around my neighborhood.
The bill’s author is Rep. Loren Solberg, DFL-Grand Rapids, head of the House Ways and Means Committee. There is no Senate companion as yet, but the bill has been fast-tracked through to the House Taxes Committee.
Solberg said he doesn’t view the bill as a permanent solution to the state’s cash flow problems. But the other option would be for the state to take out short-term loans, which could negatively affect the state’s credit rating, he said.