Minnesota officials are grappling with how to fund key government programs as the state enters “uncharted territory” in the fourth week of the partial federal government shutdown.
With no deal to end the stalemate in sight, state lawmakers will have to decide whether and how Minnesota should cover services jeopardized by the federal funding freeze. Gov. Tim Walz plans to introduce his proposed response, which could include asking legislators to approve more spending, on Tuesday.
“We’d like to be able to lay out a pretty specific plan,” Walz said, adding that if the federal government is “not going to lead on this, we will.”
The University of Minnesota thus far has covered $10 million in federal expenses for 1,300 research awards from agencies such as the National Science Foundation, the U.S. Department of Agriculture, NASA, the U.S. Agency for International Development, the U.S. departments of Transportation and Homeland Security, the National Park Service and the Environmental Protection Agency, according to a memo sent to faculty and staff by Channing Riggs, the U’s director of federal relations.
Every day of the shutdown adds more than $500,000 to the tally, which will not be reimbursed until the shutdown is resolved, Riggs said.
Minnesota receives about $1 billion a month in federal funding to help cover the cost of services ranging from Medicaid to subsidized school lunches to health care for veterans. While much of that money flows directly to programs and recipients of government aid, the state relies on hundreds of millions of dollars in direct funding and reimbursements. A prolonged delay in those payments could lead to cash flow and budgeting issues.
“Any time a significant funding partner is shut down, I become concerned,” Minnesota Management and Budget Commissioner Myron Frans told lawmakers on Monday.
Frans, who has been advising Walz on the situation, said that while his thoughts are with the scores of Minnesotans already feeling the financial impact of the shutdown, figuring out how to fill the gap in services will be difficult.
“Where do we step in as a state and help ameliorate the effects of the shutdown when it’s the right thing to do and people are suffering?” Frans asked lawmakers Monday. “When do we do that and then at what point, though, do we say the state simply can’t afford [it] or the price is getting too high?”
Hundreds of affected programs have varying levels of funding, and they reimburse the state on different schedules. The federal government has not given clear guidance on when cash for programs that many Minnesotans rely on, including the Supplemental Nutrition Assistance Program, known as SNAP, and the National School Lunch Program, will run out.
There’s also no guarantee that the federal government will pay Minnesota back for money it spends to keep services flowing in the interim. Frans cautioned that there aren’t always clear answers.
“This is uncharted territory, and frankly it makes me quite nervous because I don’t know the answer,” Frans said.
Research funding in limbo
Two Department of Agriculture facilities on the U’s St. Paul campus have been closed because of the shutdown: the Cereal Disease Lab and the North Central Research and Outreach Center, Riggs’ memo said. U employees who work at the research center moved to other sites on campus, though the temporary loss of their federal colleagues “represents a significant disruption for collaborating researchers at the University,” she added. “While the Department of Education is funded and is open, we are aware of a small number of U of M students having difficulty verifying income with the shut-down IRS for the purpose of determining financial aid.”
Leonard Ferrington Jr., Department of Entomology and Environmental Sciences track coordinator, said the shutdown has many researchers concerned. He cited an article from the journal Nature highlighting ways the shutdown could harm scientific research, especially if the work is time sensitive.
“This is especially the case when projects are working with live specimens that have specific project-relevant genetically selected test species, or use lab cultures of rare, endangered or threatened species,” Ferrington said. “These test organisms must be fed and cared for, some on a daily basis, and projects would be ruined if the maintenance were to be interrupted.”
Even so, Christopher Cramer, the U’s vice president for research, said he has no crises to report at present.
“We’re basically doing everything that we would do if the government were open. We’re just kind of accruing accounts receivable that will ultimately need to be made up,” Cramer said. “So it’s really the university taking the risk here.”
Long-lasting economic hit?
He said the pain might start for researchers working on a federal contract or grant that might end soon and need to be renewed. That can be covered for a while, Cramer said, “but if this goes on for three months or so I think we’d begin to see researchers who would have their work effectively stopped unless they can identify some sort of bridge funding.”
Cramer noted that the shutdown is only partial. The National Institutes for Health and the Department of Energy remain open, so projects funded by those agencies are unaffected.
On top of the budgeting implications, state officials are preparing for the possibility that the longest shutdown in history could have a lasting impact on the economy.
In addition to Minnesotans missing out on paychecks or government services, Frans said businesses and families may delay decisions if they aren’t able to complete mortgages or loans through federal programs. The window and assistance for federal and state tax filings, already expected to be complicated by the new tax laws, also could be affected.
Additional state spending to backfill services in future months would require legislative approval. House Speaker Melissa Hortman, D-Brooklyn Park, said she planned to meet with House Ways and Means Committee Chairman Lyndon Carlson, D-Crystal, to talk about what the Minnesota House members need to be ready to do to respond to the shutdown.
Senate Majority Leader Paul Gazelka, R-Nisswa, said lawmakers will “listen to Gov. Walz’s proposals and go from there.”