The 2009 legislative session ended with painful consequences for many and without clear resolution; this is not surprising given the magnitude of our projected revenue shortfall and budget deficit. What seemed different about the 2009 session was the Governor’s absolute inflexibility on general taxes, making impossible the kind of balanced approach Minnesota has historically called upon to solve budget problems.

An Inhumane Veto
In the final days of session, the omnibus budget bills and tax bills were all passed by the legislature. Nearly all the spending measures were signed into law by the Governor. The big exception here is the line-item veto of funds in fiscal year 2011 for General Assistance Medical Care (GAMC) which provides health insurance to our poorest and most vulnerable people, including many with mental illness and disability. This is a distressing turning away from our commitment to move toward coverage for every person in Minnesota — and this will be a huge financial loss for hospitals, medical clinics, and mental health centers. As examples, Hennepin County Medical Center will lose over $100 million annually; Regions Hospital over $46 million; St. Cloud hospital will lose $12 million a year; St. Joseph’s in St. Paul, $4.4 million; St. Mary’s in Rochester, $19.3m; St. Mary’s Duluth, $9.3m and so forth across the state.

The Minnesota House attempted to override the Governor’s GAMC line-item veto, but failed by three votes on a straight party line vote.

Attorneys for Legal Aid are looking into whether the Governor’s veto of funds for an entitlement health care program has any precedent and whether there is any basis for a legal challenge.

Tax Bill Veto Upsets Balanced Budget
The Governor also vetoed the tax bill that provided necessary revenue for all the omnibus spending bills that the Governor signed. This tax bill provided a new fourth-tier income tax rate of 9% on about 2% of the highest income households (taxable income over $250,000 for joint filers), along with higher taxes on alcoholic beverages, and a new tax on finance companies charging high interest rates. The House attempted to override the Governor’s veto, but failed by five votes.

Unprecedented Unallotment
As a result of having spending bills signed into law, but no tax bill, the state’s budget is out-of-balance and the Governor will assert his statutory authority to unallot approved spending, just as he had promised. He has announced that he will reduce spending in human services, higher education, and local government aids. He specifically cited his belief that people were moving to Minnesota because of overly generous welfare benefits.

Research is continuing, but this appears to be the first time in state history that the Governor is asserting unallotment powers at the beginning of a biennium. In the past, Governors have unalloted funds to bring budgets into balance during the last fourth of a biennium.

Governor Pawlenty has now introduced unallotment as a budget negotiation tool before a biennium starts, greatly expanding the power of the executive branch. Under this new power dynamic, the Legislature has much less influence on state fiscal policy. On this topic, professor Larry Jacobs’ op-ed piece in the Star Trib is not to be missed. It should be noted that unallotment authority is statutory, so look for the legislature to carefully review this language when it next convenes. Unless called into special session, the legislature will reconvene on February 4th, 2010.

Successes and Progress
On the bright side, JRLC worked hard to expand health care coverage and strongly opposed the proposed cuts to MinnesotaCare. The omnibus health and human services bill preserved health care eligibility and protected the expansion of MinnesotaCare coverage to about 20,000 children.

JRLC members and community volunteers distributed 30,000 fliers across the state calling attention to the GAMC cuts.  Our analysis on the Governor’s proposal was hard-hitting, accurate, and prescient.

We also worked to stave off proposed cuts to the renters’ credit which was an issue in the tax conference committee. The rent credit is vulnerable in the Governor’s unallotment process, as his budget initially proposed a 27% reduction to this item.

JRLC also weighed in to help stop proposals to expand gambling across the state.

Ending Poverty
Also on the brighter side we worked hard to help draft, introduce, and organize hearings for four bills directly related to the goals of the Legislative Commission to End Poverty: Poverty Impact Statement, Ladders Out of Poverty, Emergency Jobs, and Enhanced Earnings Package. These bills are now poised for more progress next year.

In the middle of session we successfully defeated a host of bills aimed at our public assistance programs. Bills instituting residency requirements, fingerprinting, ATM restrictions, photo IDs, and border restrictions on purchases were all defeated thanks to an outpouring of concern from the faith community and the Affirmative Options Coalition.

Housing and Homelessness
JRLC teamed up with Heading Home Minnesota to help advocate for affordable housing and to end homelessness. The legislature adopted the Governor’s budget for Emergency Services and Transitional Housing: base funding but no restoration of one-time money. For Supportive Housing, the Legislature appropriated $3 million in general fund money, and directed the Department of Human Services to use $3 million in federal stimulus money for the Long-Term Homeless Supportive Services Fund. For Homeless and Runaway Youth, the Legislature appropriated $218,000 in general fund money, and directed the Department of Human Services to make available $2.5 million in federal stimulus money. In addition the Housing Trust Fund is increased by $4 million for the 2010-2011 biennium to help support existing supportive housing programs.

Children’s Advocacy
iCAN, our children’s advocacy network, worked to secure an $8 million increase in child care thanks in part to federal stimulus funds. We are concerned that the unallotment process may jeopardize this and other safety net funds.

iCAN also gave grassroots support to the Healthy Homes/Healthy Congregations agenda item that regulates the use of the chemical BPA, especially in items used by children. This bill passed and was signed by the Governor.

Other Items
•    We lament the loss of about 65% of funding for sustainable agriculture grants
•    Half of the work bonus grants in MFIP welfare-to-work program were cut
•    The Impartial Judiciary bill gained ground in the Senate and we are promised a hearing in the House next session.
•    The last week of session when everyone at the Capitol seemed weary, we delivered a booklet that JRLC published, Prayers and Reflections for People Who Serve in the Public Arena, to all legislators and the Governor.

Looking Ahead — JRLC Day on the Hill
Day on the Hill will be Thursday March 25, 2010. Registration is now open, we look forward to seeing you there!