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PIM FAQ: The ins and outs of unallotment

[This story originally appeared in the June 4 issue of Capitol Report.]

The next act in Minnesota’s deficit drama won’t begin until later this month, when Gov. Tim Pawlenty starts making good on his pledge to balance the state’s budget by unilaterally imposing cuts to a wide range of state spending programs. In the meantime, though, Pawlenty’s unprecedented assertion of emergency executive budget-cutting powers–not merely to patch over short-term troubles but to resolve a stalemate with the Legislature over the entire 2010-11 biennial budget–is generating plenty of conflict and confusion.

So here are some essentials of the unallotment imbroglio.

What are the origins of Minnesota’s unallotment law, and how much has it been used?

The law was passed in 1939 as part of a broad package of government reforms urged by Republican Gov. Harold Stassen. At the time, Minnesota was facing a revenue shortfall caused mainly by a post-1937 downturn in the Depression-era economy, and Stassen wanted the administrative authority to make emergency spending reductions to keep the budget in balance.

This year represents the fifth time in the modern era that unallotment powers will have been used by a Minnesota governor. During the recession of the early 1980s, Republican Gov. Al Quie unalloted $195 million. A 1986 budget impasse was resolved in part through $109 million in unallotments by DFL Gov. Rudy Perpich. The other two uses of the power have been by Pawlenty: $281 million in 2003–when the state was dealing with a $4.3 billion deficit and a mild economic downturn–and $272 million last December.

Are there limits on how much a governor can unallot?

The only restriction, according to Joel Michael of the House Research Department, is that unallotment cuts cannot be greater than the amount of the projected revenue shortfall. And the size of that number is up to the governor’s commissioner of Finance (now the Department of Management and Budget).

There are limits on the governor’s power to unallot funding for certain state government functions, however. Pawlenty can cut funding for the state’s constitutional offices–governor, lieutenant governor, secretary of state, auditor, and attorney general–as long as the cuts don’t require the essential duties of each to be transferred to other bodies. But the governor cannot unallot the legislative or judicial branches.

How does Minnesota’s unallotment law compare to emergency budget-reduction powers in other states?

In all, more than 40 states grant emergency budget-cutting powers to the executive branch. Joel Michael, who has written an influential analysis of the Minnesota law, characterizes it as one of most open-ended in its grant of gubernatorial authority. House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, whose office has also been studying this question, notes that some states cap the share of the budget that a governor can summarily cut, or require that those cuts be ratified by the Legislature.

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