Estimated 3,300 to 4,700 jobs lost due to Governor’s unallotments

Today at a Legislative Advisory Commission hearing on the Governor’s $2.7 billion unallotment plan for FY 2010-11, state economist Tom Stinson estimated that 3,300 to 4,700 jobs would be lost through June 2011 directly due to the Governor’s unallotments, including:

  • Local government (not including school districts): 1,630 – 1,970 jobs lost
  • State government (including higher education: 870 – 1,630 jobs lost
  • School districts: 300 – 600 jobs lost
  • Private (health care, etc): 500 jobs lost

These job numbers are estimates, made with conservative assumptions, and should be viewed as such. But they do represent real pain.

Under the Governor’s unallotment plan, public universities, tax credits to low-income renters, mental health services and aids to local governments are cut, to name just a few examples. Localities are already feeling the impact – the Star Tribune recently reported on tough times ahead in Washington County. The county has already eliminated the equivalent of 21 full-time jobs and now it faces a loss of $2.2 million in local government aid in 2010 under the Governor’s unallotments. They are planning for more layoffs and cuts in services.

And remember, the 2009 Legislative Session yielded about $1 billion in cuts in for health care, social services, higher education and other areas, which will likely yield job losses as well.

There’s a new spreadsheet from Senate Fiscal staff, with the unallotments and the impact on the FY 2012-13 biennium. The Governor’s unallotment actions will close the budget deficit for the FY 2010-11 biennium. According to Minnesota Management and Budget, that leaves a $4.4 billion deficit in FY 2012-13. However, that number is in dispute, as it assumes the $1.2 billion school aid payment deferral is paid off in FY 2012-13 and the $600 million property tax shift from school districts is not paid off.

Budget figures are based on current law, and this is an area where there is some dispute about what the current law is. Senate Fiscal staff estimate a FY 2012-13 deficit of $5.9 billion, assuming that funding for General Assistance Medical Care would return to previous funding levels in that biennium (after losing its FY 2011 funding to the Governor’s line-item veto and a portion of its FY 2010 funding under unallotment) and the property tax recognition shift is paid off. You may also have seen estimates of a $7.2 billion deficit in FY 2012-13 – that figure includes the impact of inflation.

After an often passionate discussion with the Commissioner of Minnesota Management and Budget Tom Hanson, the Legislative Advisory Commission passed a resolution stating “it would be unwise and not in the interest of the State’s long-term fiscal stability for Governor Tim Pawlenty to approve the allotment reductions and administrative actions.” But the Commission only acts in an advisory capacity. With the start of the budget biennium tomorrow, the Governor’s unallotments will start to take effect.

I encourage our blog readers to post their own observations on the unallotments, especially the impact on the people of Minnesota.

-Katherine Blauvelt

About Katherine Blauvelt

Katherine Blauvelt served as the Minnesota Budget Project’s policy analyst from 2007 to 2009.
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