Friday, December 19, 2008

Unallotment, for the rest of us 

There goes my budget:
Gov. Tim Pawlenty plans to cut money for cities and counties and for human services to make up for a $426 million short-term deficit.

Pawlenty presented his plan Friday afternoon. It includes $110 million in cuts for cities and counties. It will be deducted from the money they were set to get Dec. 26.

...Pawlenty's plan also includes cutting spending for human services by $73 million and taking back $40 million allocated to the University of Minnesota and the Minnesota State Colleges and Universities system.
The Taxpayers League's Phil Krinkie is applauding this decision. The key was to get it out there before the LGA money was to be distributed. You can only unallot monies that haven't been spent, and if you sent out the LGA money on the 26th you would either have to make deeper cuts to human services and higher ed, or impose a quicky tax increase. Besides bad timing, the latter option probably is impractical in such a short period given the lag between passage of a bill and implementation. I will be waiting to see DFL reaction to this, but my expectation is that any commentary will be muted -- their turn comes to deal with the $4.8 billion deficit to be closed for the upcoming biennium, so they'd be better off letting Pawlenty accept the responsibility for this without any cover or criticism.

We're already looking around the university for money not to spend, cutting travel and looking for low-enrollment classes we might be able to cut. I don't know the local effect because I haven't yet heard what the split on that money would be between the U and MnSCU (and whether the latter puts more pain on larger institutions, which has been their wont in the past.) The university has been trying to keep us up-to-date with information. If I learn more that I can share, I'll update this.

UPDATE: Here's the governor's announcement. MnSCU takes a $20 million hit, and the U of M system takes $20 million.
For the remainder of FY09, the reductions represent approximately five percent of the unexpended general fund appropriation for each.

�These reductions present a challenge, but the availability of reserves and unspent state appropriations at these institutions should allow them to respond without dramatic impact on students,� Governor Pawlenty said. The MnSCU system has approximately $70.8 million in reserves across all campuses and about $7 million in central reserves. The University of Minnesota has $15 million in central reserves and $50 million of unspent state appropriations not needed to cover binding obligations.

Most departments excepting police and corrections and military & veterans affairs are going to take a 10% hit. Meanwhile, the legislative leaders have volunteered to chip in $2.2 million of their funds; it expects to spend $80 million according to budget documents.

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