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Supreme Court rules against unallotment: Pawlenty, Minnesota lawmakers return to 2009 budget negotiations

ST. PAUL -- A dramatic Minnesota Supreme Court ruling Wednesday threw state budget talks back to 2009.

Minnesota legislators and Gov. Tim Pawlenty failed to balance the state budget a year ago and a Wednesday high court ruling ordered them back to the negotiations table they left then. The court threw out the governor's summer unilateral budget cuts and told the two sides try again to plug a $2.7 billion budget hole.

Pawlenty used a process known as unallotment to cut spending and balance the budget after negotiations failed. While the court ruling tells them to return to talks, most involved in the process said the practical outcome is a budget looking much like Pawlenty created with his cuts.

"I wouldn't expect the Legislature to change the unallotment," said Tim Flaherty of the Coalition of Greater Minnesota Cities. "Most of those unallotments have already gone into effect."

Flaherty, whose organization strongly opposed local aid cuts Pawlenty made, said that it would not make sense to give the money back to state-funded organizations and programs, then take it away again when the budget is balanced.

"There will not be much difference," predicted former Sen. Roger Moe, DFL-Erskine, a long-time Senate majority leader.

Legislators, Pawlenty, lobbyists, state agencies and organizations that receive state funds were trying Wednesday to figure out the specific impact of the ruling.

House Majority Leader Tony Sertich, DFL-Chisholm, said that House lawyers may have many of those answers today. Pawlenty said it would be "hours or days" before he fully understood the ruling.

Pawlenty and legislative leaders plan to meet on the topic first thing this morning as the May 17 constitutional deadline nears for the Legislature to adjourn.

The court, on a 4-3 vote, said that state law requires lawmakers and the governor to pass a balanced budget before the governor can use his unallotment authority.

"The Legislature has the primary responsibility to establish the spending priorities for the state through the enactment of appropriation laws," Chief Justice Eric Magnuson wrote in the majority opinion.

Magnuson, appointed by Pawlenty, said unallotment is a narrow process that the governor violated.

"The unallotment statute provides the executive branch with authority to address an unanticipated deficit that arises after the legislative and executive branches have enacted a balanced budget," Magnuson wrote. "The statute does not shift to the executive branch a broad budget-making authority allowing the executive branch to address a deficit that remains after a legislative session because the legislative and executive branches have not resolved their differences."

Unallotment is a law that allows the governor to cut budgets in emergency situations when there is not enough revenue to cover state expenses.

Regardless the court decision, Pawlenty said, the state budget must be cut.

"The funds simply do not exist to reinstall this unallotment decision," Pawlenty said.

Sertich said that lawmakers likely will go along with many, but not all, of the cuts Pawlenty made.

While the court ruling technically applies to just $5.3 million for a special dietary program, the governor and most others in the Capitol said it appeared to apply to all of his unallotments.

The decision opens the door to additional lawsuits from any organization that Pawlenty cut.

"I expect that will happen," said Rep. Morrie Lanning, R-Moorhead.

Flaherty said his group of cities outside of the Twin Cities will not sue, and he hopes others do not, either.

Despite the ruling, Lanning said, he thinks the Legislature should make official the cuts Pawlenty announced. Failing that, Lanning and Rep. Rod Hamilton, R-Mountain Lake, said that lawmakers must assume they have a $2.7 billion hole to fill.

"That just compounds the huge task we have ahead of us," Hamilton said.

House Ways and Means Chairman Loren Solberg, DFL-Grand Rapids, said he hoped the ruling would lead to more equal negotiations between the Legislature and Pawlenty.

"It's obviously going to be more work and more difficult but that's what we get elected to do," said Solberg.

Everyone agreed on one point: "It's going to make a conclusion to this session more difficult," said Sen. Tom Bakk, DFL-Cook.

In his summer budget-balancing decision, Pawlenty delayed $1.8 billion in payments to school districts. He also cut $200 million via executive actions that are not affected by the court ruling. That leaves $700 million in program cuts that lawmakers and Pawlenty still need to discuss.

The state's two-year budget is about $30 billion.

The ruling threw into question all kinds of legislation, ranging from a proposal to build a new Vikings football stadium to reforming health care programs.

A Dec. 30 Ramsey County district court ruling that the high court now has upheld dealt with a $5.3 million program that provides special diets to 4,300 Minnesotans with medical problems.

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Andrew Tellijohn of the State Capitol Bureau contributed to this story. Tellijohn and Don Davis report for Forum Communications Co., which owns the Bemidji Pioneer.