Many members have been asking questions about what we think will happen on June 30, so we now give you our “best” predictions as of June 23, 2011. First, we believe there will be a state government shutdown—there is only a week left until the end of the biennium and there are no real “deals” being made. The governor and legislature continue to be about $1 billion apart in the deliberations, and that is a lot of money. Even if they talked through all of the issues during the next few days, there has to be agreement within the caucuses and time for a special session to be called and legislators brought back to St. Paul. They are just running out of time.

So, the second question is whether we will be paid after June 30. That is being decided by the courts as we speak—see related article. This leaves us with the third question about how long the shutdown will last. The only shutdown we have actually experienced in Minnesota happened in 2005—it lasted eight days, but did not impact all aspects of government like this one will. We had hoped there would be a clear incentive to act quickly—the state employee agreement obligations—however, that is being changed. Minnesota's public employee unions have cut a tentative deal with the state that could save taxpayers millions in the event of a government shutdown next month.

The proposed agreement, which still must be approved by state union membership, would not give laid-off workers payouts for their banked time off or severance packages. But their insurance benefits would continue during a shutdown and they would be able to return to work after the shutdown with all their benefits intact. It was estimated that the amount of cash the state would need to pay off all of the accrued state employee time was in the hundreds of millions—cash the state doesn’t have right now. The unions and the state said the agreement is much like arrangements made in 2001 and 2005.

We still believe the shutdown will not last until the fall and that the budget will be resolved in July for several reasons. The longer they go, the more difficult it will be to solve the budget gap in the health and human services arena if they planned to use increases in surcharges—that money will be lost forever. Secondly, the courts are likely to give some strict deadlines and orders, as this is the third time in a decade—with Governors from three different parties—that the Governor and Legislature didn’t resolve budgetary differences in time.

Patti Cullen, CAE
952.851.2487
pcullen@careproviders.org