Governor's unallotment battle lands in court

The fate of the biggest budget battle of Gov. Tim Pawlenty's career now rests in the hands of the Minnesota Supreme Court.

Minnesota's seven justices -- four of them appointed by the governor -- took an aggressive line of questioning with Pawlenty's lawyers during oral arguments Monday. At issue are the timing and severity of cuts he imposed last summer through his emergency budget-balancing power known as unallotment.

The justices were equally probing of the lawyer who represented the people on a small special-diet program, who filed the lawsuit after losing their funding.

Justice Paul Anderson signaled the magnitude of the case when he directly challenged Galen Robinson, a legal aid lawyer who represented those on the nutrition program.

"You've got a big hill to climb," Anderson said. "The stakes are very high."

The unallotment case goes to the heart of the power struggle between the Republican governor and the DFL-controlled Legislature. Should the court invalidate Pawlenty's unallotments, they will have reined him in on a signature budget-cutting move that has drawn widespread praise nationally among conservatives. But a broad ruling against unallotments might also land a $2.7 billion budget problem in the Legislature's lap.

Pawlenty triggered the furor after the 2009 legislative session. Just before lawmakers adjourned, he signed the major spending bills, then vetoed a tax bill to pay for them. Outmaneuvered DFLers were furious when Pawlenty announced in June he would take emergency action to balance the newly birthed budget crisis.

Legislators griped, but it wasn't until six people on the $5.3 million diet program successfully sued in district court to get their funds reinstated that Pawlenty's use of unallotment started to unravel. A Pawlenty appeal sent the case to the state's highest court.

A timing problem

In several instances, justices dug into the timing of Pawlenty's cuts, which he announced before the two-year budget biennium in which the crisis was forecasted.

Justices questioned why the governor decided the state was suddenly in a fiscal crisis when the projected deficit hadn't changed in months.

"Counsel, I think you have a timing problem here," Anderson said to Minnesota Solicitor General Alan Gilbert, one of Pawlenty's attorneys.

"There's nothing in the statute that precludes the commissioner from preparing prior to the start of the biennium," Gilbert responded.

In many of the questions, justices reached beyond the limited scope of the lawsuit to look more broadly at the constitutionally of the unallotment law itself, not merely whether Pawlenty exceeded his power in this instance.

Chief Justice Eric Magnuson, a Pawlenty appointee who last week announced he would leave his post in June, wondered whether Pawlenty overstepped his authority when he essentially eliminated the nutrition program, for which the Legislature saw fit to set aside money.

"How is that not a violation of separation of powers?" Magnuson asked. "The governor is going in and making subjective decisions about what programs are more important than other programs. What authority is there for the executive branch to second-guess the substance of the legislation?"

In a particularly pointed exchange, Gilbert said the governor must use discretion in his unallotment priorities.

Where are the limits of discretion? justices asked.

"I want chapter and verse in the constitution," Anderson said.

"The governor must faithfully execute the laws of the state of Minnesota," Gilbert responded. "So the governor has to use that as a guideline when he decides whether to approve or not approve the commissioner's unallotments."

Gilbert also noted that the Legislature approved the budget-cutting power in dispute and reminded justices of the genesis of the legal battle.

"This is a political dispute, and we have to deal with the aftermath," he said.

Peter Knapp, a William Mitchell College of Law professor who closely follows the state's high court, said the court appeared to take an expansive look at the governor's power in its line of questioning.

"I was surprised that the court focused as much attention on the constitutional question as they did," he said. Pawlenty's use of the law "didn't seem to be on the minds of the justices during the argument."

After the hearing, both sides took their cases to the public.

"The plain and simple language of the unallotment statute, which has been in effect for more than 70 years, gives the [revenue] commissioner and the governor the authority to use this tool to balance the budget," Pawlenty spokesman Brian McClung said outside the courtroom. Unallotment was seldom employed in that time until Pawlenty took office.

Said Robinson, litigation director for Mid-Minnesota Legal Assistance: "The bottom line is that when the governor decided to unallot, the triggers for the statute had not been [met]."

McClung acknowledged a legal defeat could have stinging budget consequences. The state burns through about $50 million a day, so the longer the state waits to make the cuts, the less money is available to spread the pain.

It's unclear whether the decision merely affects the nutrition program or if it will undo the entire emergency budget cut.

"This case is very limited, but it would call into question the others, and we recognize that," McClung said. "We'd have to see what the court says in their ruling and get some guidance as to how they would anticipate it would impact the rest of the budget."

To end the unallotment uncertainty, Pawlenty has asked lawmakers to sign off on his unilateral cuts. Lawmakers have declined to do so.

It's also unclear when the justices might rule on the lawsuit, but Supreme Court spokesman John Kostouros said he expects the court to expedite this ruling.

In some cases, when time is of the essence, the court has announced its ruling and then released the detailed opinion later, Kostouros said.

Baird Helgeson • 651-222-1288

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