The Free Press, Mankato, MN

December 30, 2011

Top. 10 stories: No. 1: State government shutdown

By Mark Fischenich
Free Press Staff Writer

MANKATO — A Republican Legislature unbending in its opposition to higher income taxes and a Democratic governor equally adverse to solving a massive budget shortfall solely through spending cuts led to the longest state government shutdown in American history.

While vital services continued, thanks to court orders, the three-week shutdown led to mothballed construction projects, disruption for people seeking state licenses, closed state parks, the lay off of 22,000 state workers and a widespread disdain for politicians.

For many Minnesotans, it was hard to understand why months of negotiations between Gov. Mark Dayton and Republican leaders of the House and Senate couldn’t lead to a settlement. As people waited in lines in the final days of June to get state licenses, they provided a consistent answer when asked to assess the performance of their elected leaders.

“You don’t want to know,” said Scott Schumacher, a Janesville resident who rushed to buy a fishing license before the shutdown started July 1. “It’s so stupid, really, that they can’t compromise on something.”

While frustrating for residents, the deadlock wasn’t a shock. As far back as the early morning of Nov. 3, 2010, it was clear an immense battle was looming for the 2011 legislative session.

The 2010 general election campaign had been mainly about the billions of dollars in red ink  facing the state in the two-year budget that would take effect the following July 1. Republican candidates for the House and Senate were unified in their message to voters: Raising taxes would harm the economy, so the state must limit its spending to the revenue that current tax rates will generate.

Republican candidates won in a landslide, taking control of the House and the Senate for the first time in nearly 40 years.

Meanwhile, Democratic nominee for governor Mark Dayton ran on an unwavering call for a huge tax increase on the state’s wealthiest residents. Dayton’s message: Without new tax revenue, devastating cuts would be required for colleges, property tax relief programs, health care assistance and community-based support for the elderly and disabled.

Voters, by a narrow margin, preferred Dayton to no-new-taxes Republican Tom Emmer.

Already in November of 2010, Minnesota State University political science professor Joe Kunkel was predicting a state government shutdown when the existing budget expired on July 1.

“I think that’s where we’re headed,” Kunkel said. “I don’t see how we can avoid it. ... It’s a game of chicken.”

In the end, Dayton budged — saying he’d reached the conclusion that Republicans were willing to allow the pain of the shutdown to go on indefinitely and abandoned his insistence on higher taxes on top earners. Republicans, in turn, agreed to spend more than the $34 billion they had earlier established as a top-end limit for spending over two years.

By delaying payments to schools and through the sale of tobacco bonds, $1.4 billion was added to the budget and some of the cuts Dayton opposed the most were avoided or lessened.

Tax increases weren’t avoided completely, but it was property taxes rather than income taxes that were rising. By fall, a record number of school boards around the state were asking voters for additional property tax revenue, and most were approved.

Even without the referendums, real estate taxes were escalating in most parts of the state. Many city councils and county boards approved levy hikes, saying state aid cuts in previous years and stagnant levels of aid in coming years left them little choice.

 In some cases, taxpayers are facing higher property taxes next year even if local governments avoided levy increases because of the elimination of a state property tax credit that was part of the budget agreement at the Capitol.

A rough year in St. Paul ended with more positive news, however, as the state’s economic team predicted earlier this month there would be an $876 million surplus when the current two-year budget expires — due largely to a better performing economy.

 The longer-term outlook — for fiscal years 2014 and 2015 — has improved but still includes a $1.3 billion gap between anticipated revenue and expected spending. Which means Dayton and whoever is controlling the Legislature after next year’s election could be facing a repeat of 2011.