Report: No Long-Term Impact from Minn. Government Shutdown

The Minnesota state government came out of its summer shutdown about even, a state budget office reported this week.
by | November 22, 2011

The Minnesota state government shutdown in July had a minimal impact on the state's financial outlook, according to a report filed by the Minnesota Management and Budget office.

During the 20-day shutdown, 80 percent of state spending continued because the Minnesota Second District Court ruled that critical state services must be maintained, according to the report. The state spent $1.8 billion during July 2011, compared to $2.6 billion during July 2010.

About 19,000 state employees were initially laid off because of the shutdown. About 13,000 were deemed to be employed in critical services and worked in "some capacity" throughout the entire shutdown. Another 1,300 were recalled to work at some point during the shutdown. Approximately 17,000 employees applied for unemployment pay, costs totaling $10.4 million over the 20 days.

The state lost about $49.7 million in unrecoverable revenue during the shutdown, according to the report, and another $10.1 million was spent on costs for preparation for the shutdown and recovery from it.. The primary revenue loss, $33.5 million, came from a loss of tax compliance, the report concluded. Another $10 million was lost from expected lottery receipts. The district court also mandated that a special master be appointed to rule on petitions from those affected by the shutdown. That position cost about $59,300. The report notes that it does not account for lost productivity or indirect impacts in projecting lost revenue.

The report said that the state saved about $65 million on employee compensation. That figure combines the expected normal employee compensation ($178.3 million) and subtracts payments that were made for critical staff ($102.9 million) and unemployment compensation ($10.4 million).

The shutdown was "the longest and most expansive in the state's history to date," according to the report. It began July 1 (at the start of the new fiscal year) after the state legislature and Gov. Mark Dayton failed to reach an agreement on the state's FY 2012-2013 budget by May 23. It ended July 20 after the state legislature approved and Dayton signed a new state budget.

A copy of the management and budget office's report is included below.

 
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