In light of the Minnesota Supreme Court’s Wednesday decision, Mankato could sue the state for the $3 million of state aid payments it lost through unallotment. And it might win.
“That might make some sense from a legal standpoint,” Tom Grundhoefer, general counsel for the League of Minnesota Cities, said of cities suing the state. He said the league hasn’t decided yet if it’ll sue on behalf of its members.
But suing someone who can’t pay, even when it’s the state of Minnesota, might not be a fruitful strategy.
Even if a city like Mankato got its money back, it could lose it again — maybe even through unallotment, which could be legal in this situation.
“The reality of it is they (the state) don’t have the resources to refund any of those unallotments to any of the parties that were affected by it,” North Mankato City Administrator Wendell Sande said.
There were few certainties from local government officials the day of the ruling. A single one, at least: It doesn’t help solve the one thing that needs solving most.
“I don’t think it fixes anything,” Mankato City Manager Pat Hentges said. “The reality is the state has a budget problem.”
Cities and counties applauded the legal principles of the Supreme Court’s majority while acknowledging the practical implications may not be so favorable.
Fighting over last year’s unallotment may prove less fruitful than focusing on the existing problem, Blue Earth County Administrator Dennis McCoy said.
“I think the Legislature’s job got harder, but based on experience or intuition my guess is they will likely ratify the governor’s previous unallotments legislatively, then argue some about how do they solve this year’s dilemma.”
While much of the discussion focused on the $2.5 billion in unallotments, the specific case only dealt with a fraction — about a fifth of 1 percent, to be more precise — of the total unallotments. While the decision casts doubt about the legality of all the unallotments, it does not invalidate them by itself, Grundhoefer said.
To add another layer of complexity, unallotment might be legal now, when the state is in the middle of the two-year budget.
“We understood the unallotment provision in the statute to be applicable only when a previous budget was in place,” Sande said.
The Legislature has less than two weeks to close its short-term budget gap of $536 million. The governor proposed Tuesday to cut another $30 million from state aid to local governments, among other cuts.