“People’s Bailout” for Minnesota safety net as recession deepens


UPDATED 2/11/09 — Two DFL state legislators introduced “People’s Bailout” bills on February 9 to provide assistance to low-income Minnesotans facing unemployment, foreclosures, and welfare cuts.

State Sen. David Tomassoni (DFL-Chisholm) and State Rep. David Bly (DFL-Northfield) said that while Congress has given billions of dollars to banks, the middle class and people living in poverty have been largely ignored.

“We need legislation that reflects the needs of the public, not just big business and Wall Street,” Sen. Tomassoni said.

The legislation proposes a two-year moratorium on the current five-year limit on welfare benefits for low-income families. Currently, families are cut off welfare benefits after five years. This plan would allow families an additional two years of financial support. Exact numbers are not available on how many families would be affected, but from October 2007 to September 2008, over 800 families hit the five-year limit and lost their cash assistance. Advocates say that although the welfare grants are low–an unemployed adult with two children receives $532 in cash assistance and $413 in food support each month–the benefits are vital to preventing homelessness.

The legislation also includes a thirteen-week extension of unemployment benefits, a moratorium on foreclosures, initiatives to secure federal funds for job-creation programs, and recommendations against state worker layoffs.

Joli Stokes is one of the Minnesotans who might benefit from a temporary halt to foreclosures. Stokes, 41, could lose her three-bedroom Richfield home this year due to lasting repercussions from a World Savings home equity loan she received in 2004. The type of loan she received is now illegal under a state law passed in 2007, but despite extensive efforts, she has been unable to obtain a loan modification.

Stokes was divorced in 2004 and her $700 a month spousal maintenance payments will end in April. She works a $14 an hour job at a local pain clinic and pays over $1600 a month toward her interest-only loan.

“It’s the kind of thing that you wake up in the middle of the night and you feel sick to your stomach,” she said. Stokes said she fears uprooting her three young daughters from the home they have lived in for the past 10 years.

The People’s Bailout legislation contrasts sharply with Governor Tim Pawlenty’s proposed 2010-2011 budget, which includes extensive cuts in services for low-income Minnesotans. The governor’s plan would restrict welfare benefits for both single adults and families, eliminate a $2.5 million program to help families who are reaching the five-year welfare limit, terminate MinnesotaCare coverage for single adults, restrict the use of personal care attendants for people with disabilities on Medicaid, and eliminate Medicaid coverage for dental care, podiatry, and physical and occupational therapy. The governor says the budget cuts are necessary given the estimated $4.8 billion deficit the state will face over the next two years.

Gov. Pawlenty’s proposed budget angered many local community groups, labor unions, and low-income advocacy groups, who argue that those hardest hit by the economic downturn should be among the first to benefit from bailout money. The newly formed Minnesota Coalition for a People’s Bailout urges the state legislature to vote against cuts in human services spending and to pass the “People’s Bailout” legislation to provide a safety net for low-income Minnesotans.

“We believe you can’t cut your way to prosperity,” said Bernie Hess of the United Food and Commercial Workers Local 789, and a member of the coalition.

There is no estimate yet on the legislation’s cost. Sen. Tomassoni said that the expenses might be partially offset by federal assistance, but would also likely increase the state’s human services budget. In the long term, the bill’s creators argue it would improve the state’s economy by preventing further hardship for struggling Minnesotans.

Madeleine Baran is a freelance journalist, specializing in labor and poverty issues. Her articles have appeared in The New York Daily News, Dollars & Sense, Clamor, The New Standard, and other publications.

CORRECTION: $2.5 million in paragraph 9 (2/11/09)