Four weeks after the conclusion of the 2008 session of the Minnesota Legislature, the policy damage from the no-new taxes mantra, quick fixes on the budget deficit, and last-minute gamesmanship between legislators and Governor Tim Pawlenty is still being sorted out. It turns out that while everyone was jawboning about how much or little to raid from the Health Care Access Fund ($50 million was the final figure) to help resolve this year’s General Fund debt, Pawlenty and complicit legislative leaders were also snatching $15 million in supposedly dedicated monies from the State Airports Fund. This was part of the budget agreement hammered out behind closed doors and rushed through the House and Senate on the last day of the session, with little debate and no time for revision. As a result of this gambit, initiated by Pawlenty, hundreds of aviation-related jobs–and a whole lot of trust–may be lost.

Established in 1945, the State Airports Fund, like the Health Care Access Fund, derives its money from specific taxes that are essentially user fees: on gasoline and special fuel for planes, aircraft registration, and airline property. The fund was created to maintain and meet and the service needs of the 136 airports in Minnesota not affiliated with the Metropolitan Airports Commission. For more than 50 years, the dedicated fund was sacrosanct, immune from being poached to balance deficits in the General Fund. But during the great bloodletting of 2003, when the state strove to solve a $4.5 billion deficit without raising taxes, Pawlenty and the legislators borrowed $15 million, and were bound by law to repay it by July 1, 2007.

Incredibly, the state reneged on its commitment–failed, that is, to obey the terms of its own law–for nearly eleven months, repaying the $15 million loan from 2003 on May 21 of this year, a few days after passage of a budget bill that again lets them take the $15 million. But there’s one big difference this time: The bill authorizing this latest raid doesn’t stipulate that it be repaid at all. The net effect of this maneuvering is that Pawlenty and the legislators screwed those who operate and use Minnesota’s non-metropolitan airports out of $15 million–money those airport users and operators had paid into the dedicated fund.

On Tuesday, Senator Ann Rest (DFL-New Hope) chaired a meeting of the Senate Transportation Subcommittee on Airways, Waterways and Railways, held to determine why none of the relevant state agencies raised any red flags over the lack of repayment on the 2003 loan, and then to learn how this latest $15 million raid will affect the state’s aviation industry.

Norman Foster and Gary Workman played the role of hapless government flunkies with vivid clarity. Foster, executive budget officer for the Minnesota Department of Finance, was charged with overseeing that the state repaid the Airports Fund. “I didn’t pick it up, I should have, and I apologize,” he said. He explained that the reason he missed it was because the Fund wasn’t running at a deficit (and if it ain’t broke, apparently, then there’s no need to monitor it). But when the last-minute budget agreement was made, eleven months after the payment was due, why didn’t somebody check then? Rest pressed. “The assumption was that the funds were there,” Foster said. “Unbelievable,” said Rest, a retired CPA. “How can we be sure something like this won’t happen again?” Replied Foster: “I can’t guarantee it won’t happen.”

Then there was Workman, director of the state’s Office of Aeronautics, who is the person in charge of doling out the Airports Fund monies for various projects. Why didn’t he realize he was $15 million short? Because he’s only been on the job for a year, he said. But surely you’ve been getting monthly reports on the fund’s balance, Rest rejoined, tamping down her exasperation. Yes, volleyed Workman, but spring is an especially busy time for projects, and some of them involve federal monies as well. In essence, his responses amounted to: This accounting stuff is complicated.

Not surprisingly, the folks whose oxen are being gored were more pointed and compelling in their analysis of the situation. Brian Ryks, executive director of the Duluth Airport Authority, brought along Bill King, a vice president with Cirrus Design Corp., the world’s largest maker of single-engine piston aircraft. King said the company wants to add 200 jobs in Duluth to spur production of its new jet, which has already presold 400 units, spurring Cirrus to record sales in May. But without the State Airports Fund monies helping to leverage $9 million in federal dollars, it will be difficult for the Duluth Airport Authority to expand the airport sufficiently to provide Cirrus with the necessary facilities.

Ryks added that the Minnesota National Guard flies out of Duluth, and an inability to properly maintain the airport would have an impact on national air defense. “We don’t expect the state to be an extraordinary leader,” Ryks said. “But we do expect them to be a reliable partner.”

Harold Van Leeuwen Jr., from the Minnesota Council of Airports, followed up by telling Rest et al that “our credibility as a working group with the aviation industry has been compromised.” Leeuwen’s later declaration that “we could have an I-35 bridge collapse at the end of a runway,” was hyperbole, yet reminded Rest and the other committee members that the State Airports Fund is under the Department of Transportation and runway maintenance is as vital to user safety as any of the state’s roadways.

Representatives from Target, Supervalu and the Minnesota Business Aviation Association provided eye-opening testimony from what they described as the perspective of the “end user,” the corporate employees and executives who frequently puddle-jump around the state monitoring their stores and outlets. Jon Krall, the aviation director for Supervalu Inc., said that his company pays the state $200,000 in registration fees per aircraft the first year it operates in Minnesota and $180,000 each succeeding year. “Now I can’t even confidently explain [to his bosses] that the money goes to aviation causes,” Krall lamented.

This resonated with Sen. Michael Jungbauer (R-East Bethel), who along with Rep. Michael Beard (R-Shakopee), is regarded as one of the foremost experts in the Legislature on aviation matters. It was Jungbauer who inserted the legal language at the time of the 2003 loan that stipulated that the state must repay the Airports Fund. And it was Jungbauer who, left out of the loop during final budget negotiations, was forced to fruitlessly argue against the 2008 loan during the final days of this session. “When people see a stunt like this–with fees geared toward a specific purpose instead going into that great black hole of the General Fund…that’s when people get leery about paying taxes,” Jungbauer noted.

The only one of the five senators present on Tuesday who also took part in the last-minute budget talks with the governor was Sen. Steve Murphy (DFL-Red Wing), chair of the Senate Transportation Committee. “I had been asked about the Airports Fund [raid] and I said I thought it was a terrible idea,” Murphy remarked. “But they said, ‘Wrap the session up; the governor insists upon it being [in] there.’” To which Rest quickly retorted, “And we [meaning the DFL-majorities in the House and the Senate] passed it. There were two parties at work here.”

Clearly irked at the dysfunctional process, and the lack of repayment provisions, she said, “It really will be an uphill battle to get these user funds back to the users. Okay, take the money. We had never done it before 2003, and now we are doing it again, but pay it back. I hold the governor and the Legislature accountable.”

“You got my dander going,” Jungbauer said to Rest in a bipartisan show of pique. “The governor claims to be a friend of business and then leaves no provision for paying this money back.”