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It's D-Day for state budget woes, as in definitely real
July's start puts budget issues on the front burner as the unallotment process kicks in. Also here: A state pay freeze and suspension of the political contribution refund program.
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Minnesota's budget meltdown finally starts to bite today.
With the arrival of July 1, the state's $2.7 billion budget deficit for the next two years is no longer theoretical.
It will make itself felt immediately in department budgets and state employees' bank accounts.
With the start of the new fiscal year, Gov. Tim Pawlenty's "unallotments," unilateral cuts in spending on programs, will formally take effect.
Pawlenty undertook the cuts and accounting changes after he and the DFL-run Legislature couldn't reach agreement on a budget.
Pawlenty and his budget officials have been tweaking their budget adjustment plans for several days. His top finance official, Commissioner Tom Hanson, appeared at a hearing of the Legislative Advisory Commission to discuss details of the budget cuts with DFL leaders.
In a letter sent to them on Monday, Hanson detailed some of the cuts, adding, "these imminent unallotment and administrative actions are not taken lightly.
"Unfortunately, there remains a $2.7 billion gap between anticipated revenues and expenditures for the next budget cycle. Accordingly, we are taking these actions in order to uphold our duty to bring the budget into balance."
In the letter, Hanson also revealed that the bad budget news isn't expected to let up anytime soon.
He said the administration estimates that the deficit in fiscal 2012-13 will be an eye-popping $4.426 billion.
The immediate bad news for state employees comes today when a two-year pay freeze kicks in.
Workers represented by AFSCME Council 5 and the Minnesota Association of Professional Employees will see their wages frozen at current levels through June 2011.
The contracts suspend raises for years of service in the first year, but reinstate those increases in the second year.
Also starting today, a program that had allowed contributors to file for $50 tax refunds for a donation of at least that amount is being suspended for the next two years.
By halting the program, the state expects to save more than $10 million.
Bob Von Sternberg • 612-673-7184 The Associated Press contributed to this report.
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Current state office holders
Governor: Tim Pawlenty
One of only a few prominent Republicans to win a competitive re-election contest in the Democratic sweep of 2006, Tim Pawlenty is widely seen as politically shrewd and naturally likable.
- Lt. Governor: Carol Molnau
- Secretary of State: Mark Ritchie
- Attorney General: Lori Swanson
- State Auditor: Rebecca Otto
Minnesota's political giants: Learn more about the men and women who have shaped Minnesota's political history.
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