As of Tuesday, it will be the 19th day of the state government shutdown in Minnesota. Rev. Mark Peters offered a commentary to a recent edition of Metro Lutheran addressing some of the implications of Minnesota’s budget crisis. Follow this link to read his full reflection.
On a national perspective, the shutdown is the longest in our country’s history. In the words of Republican State Senator John Howe, “Every day we set a new record, one we are not proud of.” Indeed, what we’re facing in Minnesota is a microcosm of the gridlock happening at the federal level over whether to raise the debt ceiling.
Gov. Mark Dayton and legislators had hoped to call a special session this past Monday, yet signs of a quick resolution have dimmed as of this writing. Dayton and Republican leaders issued a joint statement saying, “A special session will be called as soon as our work is completed, and all bills have been reviewed and agreed upon.” The Governor and legislative leaders agreed to $2.8 billion in one-time solutions, including $1.4 billion by continuing the current shift in payments to school districts, another $700 million in a new shift in payments to school districts, and $700 million in tobacco bonds. Instead of paying upfront with fairly raised taxes, we have said we will pay for it sometime in the future. This heavy reliance on one-time solutions is unsustainable and will cause the state to face even more deficits in another two years. As aptly noted by Christina Wessel of the MN Budget Project, “It’s time to face reality. We are no longer kicking a can down the road; it has become a 55-gallon drum.”
Fitch Ratings recently downgraded Minnesota’s bonds from AAA to AA+. Their decision was triggered by the state’s recent track record of using one-time resources to address budget deficits. While Fitch had anticipated that lawmakers would use $1.4 billion in one-time solutions to solve the current deficit, the final agreement actually doubles that amount to $2.8 billion. This significant and repeated use of one-time resources could trigger other rating agencies to take action. A lower credit rating means higher borrowing costs not just for the state, but also school districts, cities and counties across Minnesota.
Tuesday, July 19th 2011
