Last June, Pawlenty used his unallotment powers to eliminate funding for several programs, including $300 million in cuts to local-government aid and $236 million in human-services spending. One of those cuts ended the Minnesota Supplemental Aid Special Diet Program. Those clients sued and won in lower courts. On Wednesday, the Minnesota Supreme Court agreed.

The court wrote (pdf):

In the context of this limited constitutional grant of gubernatorial authority with regard to appropriations, we cannot conclude that the Legislature intended to authorize the executive branch to use the unallotment process to balance the budget for an entire biennium when balanced spending and revenue legislation has not been initially agreed upon by the Legislature and the Governor. Instead, we conclude that the Legislature intended the unallotment authority to serve the more narrow purpose of providing a mechanism by which the executive branch could address unanticipated deficits that occur after a balanced budget has previously been enacted.

Because the legislative and executive branches never enacted a balanced budget for the 2010-2011 biennium, use of the unallotment power to address the unresolved deficit exceeded the authority granted to the executive branch by the statute. We therefore affirm the district court‘s conclusion that the unallotment of the Special Diet Program funds was unlawful and void.

Gov. Pawlenty released this statement in reaction to the decision.

“I strongly disagree with this 4-3 decision by the court. Nonetheless it will require the legislature and my administration to address its budget impacts. The funds do not exist to reinstate my unallotments and the state budget needs to be balanced without raising taxes. I call upon the DFL-controlled legislature to ratify the unallotments I enacted last year.

“I will fight to reduce spending and taxes in Minnesota and that battle continues. My commitment to the people of Minnesota remains the same: we will balance the budget without raising taxes.”

Elsewhere in Minnesota news this morning …

MINNEAPOLIS: No snow day for education reporters. Read news of struggling public schools or a feature and column about successful private schools. [Star Tribune]

ST. JOSEPH: “Petters Auditorium” … not. The pyramid-schemer’s family name will no longer bedeck the hall at the College of St. Benedict. [St. Cloud Times]

ST. LOUIS COUNTY: Schools referendum passes, barely. Voters decided to close four of the seven schools where they cast ballots Tuesday. [WDIO Eyewitness News]

SAVAGE: Blecchh! The city shut off the flow of musty-smelling and -tasting water from a new plant in Burnsville. [St. Paul Pioneer Press]

MINNEAPOLIS: U Otter Stop fighting. A brawl outside a saloon left a female University of Minnesota art history research assistant with a broken leg — a possible hate crime. [Minnesota Daily; Minneapolis Issues List]

MINNEAPOLIS: Who you gonna call? Witnesesses didn’t call police about that fight, but if they do next time, they’ll reach a force with 25 fewer officers. [Minnesota Daily]

“It’s usurping the power of the legislature… Right now he’s actually writing laws,” he said. “I don’t know where’s he getting this authority, and nobody’s really taking him on.”

“Right now any governor — whether the governor is Tom Rukavina or Tim Pawlenty — can basically sign every spending bill and then decide to unallot,” he said.

Rukavina agrees that Pawlenty’s motives in unallotment have been more about his national political ambitions than in looking after Minnesota’s future.

“I think he’s being very insincere in his claim that he loves this state and loves the people of this state,” he said. “Because what he’s doing to them isn’t, from where I come from, any sign of love.”

On Monday, the House Rules Committee voted to file a brief in support of a suit against the governor’s unallotment of some $2.7 million from the state budget.

Watch it:

See answers by DFL gubernatorial candidates R.T. Rybak and Paul Thissen to Stellmacher’s ongoing candidate series on the biggest threats to Minnesota.

Koering announced in June that he was putting together an exploratory committee to determine if he had the support to launch a campaign.

But he deemed a run not feasible, gauging that, after Gov. Tim Pawlenty’s unallotment dismantled the political contribution refund program, fundraising would be “extremely difficult.”

On the issue of GOP activists not willing to back a gay candidate, Koering said, “I didn’t really want to say that. [But] that’s a hurdle some delegates can’t get over.”

Koering also said his views are sometimes not conservative enough to placate the party base. He’s gotten a bad rap from the Taxpayers League, and he’s come out in favor of some progressive causes, medical marijuana, for example.

At the end of this last legislative session, Pawlenty demanded his Democrat-controlled legislature balance the budget or he would. Not only had Democrats passed budget bills that left a $3 billion gap in income and expenditures, but they wanted to increase taxes on their fellow Minnesotans on everything from alcohol and music downloads, including income taxes for every bracket.Pawlenty outwitted his big-spending legislators and exercised an obscure law on the books that enabled him to remove any state spending for which funding doesn’t exist. In Pawlenty’s last major achievement as governor, he balanced the budget and finally removed Minnesota from the dreaded list of top ten most highly-taxed states. Talk about going out with a bang.

Unallotment — Pawlenty’s unilateral slashing of expenses without input of the full legislature — also gets the guv praise south of the border. Quoted in the Iowa alt-weekly CityView, Linn County Republican Party chair Tim Palmer considers Pawlenty a darkhorse: “He’s a neighboring governor who just pulled off what many call a ‘budget miracle’ in his home state and is leaving on a high note.”

But here in Minnesota, some are less enamored of unallotment. At least two groups are considering court challenges of Pawlenty’s authority to make the sweeping cuts. The state chapter of the ACLU is considering a suit over the elimination of Minnesota’s political contribution refund program and the scrapping of the General Assistance Medical program for poor, single adults. And, as Paul Demko reported here last month, Common Cause will definitely be suing over unallotment. In a filing in the next few weeks, the nonprofit plans to question Pawlenty’s constitutional authority to use the unallotment powers so broadly and challenge whether he can defund programs that are enshrined in state law.

In the near term, Pawlenty’s education shift will hurt school districts paying interest on money they now must borrow to cover state aid that doesn’t arrive when promised — to the tune of $30 per pupil.

In the longer term, Democratic leaders say that in unallotting education, Pawlenty is only “mimicking” the kinds of budget shifts the state has seen before; the governor doesn’t have the authority to pledge that the money will be made up later.

“You’re looking at a $5-billion deficit and no repayment authority,” says Senate Majority Leader Larry Pogemiller, “so what I would say to school districts is you are absolutely kidding yourselves if you think this is going to be paid back.”

Northern Minnesota community colleges are preparing for a hit of 26 percent: “We’re looking really hard at areas where we can share costs,” said Sue Collins, president of the Northeast Higher Education District. “We’re also looking at how we can use technology to keep costs down, and pursuing more group purchasing to reduce the cost of supplies. Our preference is to keep from cutting people or programs that students need.”

White Bear lake will be cutting weed-spraying and scaling back snow plowing:
“The focus will be more on safety and less on convenience,” City Manager Mark Sather said. “You know, that difference between plowing snow when it’s 3 inches on a Sunday, or waiting until Monday to do it. People say, ‘I can get through, and I have to drive a little slower because they haven’t been salting and sanding, but the streets are still safe.’ ”

In Freeborn County, the Dept. of Human Services working are looking at scaling back programs and instituting wait-lists.

“It’s going to boil down to the level and amount of services that the clients will be seeing because of a reduction in funding,” Freeborn County Department of Human Services Director Brian Buhmann said. “We may see a waiting list for services. And we may see families having to step up to the plate even more.”

Rep. Tom Bakk, a gubernatorial hopeful, says that thousands of jobs will be lost in the wake of the unallotment: “In determining the impact of unallotment on Minnesota employment, [State Econoimist Tom Stinson] divided direct job losses through 2011 into: local government (non school) 1,630 – 1,970 positions; state government (including higher education) 870 – 1,630 positions; school districts 300 – 600 positions; and the private sector 500 positions. An additional 1,500 to 2,500 jobs could be lost as people without jobs purchase fewer goods, the industries losing employees purchase fewer supplies, etc.”

Brainerd is looking at cuts of $269,942 in local government aid for 2009 and $622,858 in 2010. City leaders say furloughs and retirements are a definite, but are still looking at options to make up the losses. “This year is going to be a difficult year for budgeting,” City Administrator Dan Vogt said. “In the type of budget times we’re in I think we need more direction from elected officials as far as coming in with a budget you’d like to see.”

Dems have long charged the self-described anti-tax Pawlenty with imposing stealth taxes by cutting aid to local governments that in turn must increase property taxes to maintain essential services and government functions.

Pawlenty counters that such hikes aren’t inevitable and that counties and cities simply need to look harder for budget items to cut.

But in a letter (pdf) to the Legislative Advisory Commission that is reviewing (in an advisory capacity) proposed unallotments, the Pawlenty administration concedes that state budget cuts cause taxpayers to pay more taxes via property taxes hikes:

Property Tax Refund/Income Tax Interactions: The reductions in aids to local governments are assumed to result in property tax increases which increase state property tax refund payments and reduce state corporate and individual income tax receipts due to larger deductions. This cost was not included in the fiscal estimates provided on June 16. The estimated impact is $5.7 million for FY 2011.

Moorhead, part of the MnSCU system, which faces a $50-million budget cut (Creative Commons photo by J. Stephen Conn via Flickr)

For Minnesota’s college administrators, the announcement of the Gov. Tim Pawlenty’s unallotment plans was a good news/bad news story. The size of the budgetary hit was not as big as they expected. But, it’s still a substantial amount. They were prepared for it, but it’s still coming.

The governor announced that the state’s two higher-education systems — which comprise 32 colleges and state universities, four University of Minnesota campuses in greater Minnesota and the Twin Cities’ U of M campuses — will each take a hit of $50 million dollars, or about a 3.6 percent drop. Many of these campuses are a couple of hundred miles away from St. Paul where the budget decisions are made.

Kurt Hanson, a provost of Northland Community and Technical College in Northwest Minnesota, said the recession hasn’t hit that part of the state too badly, because of its proximity to North Dakota, which is doing relatively well. His school primarily provides job training programs, two-year degrees and general education credits for North Dakota and Minnesota students. Several months ago the president of the Minnesota State College and University (MnSCU) system told the member schools to look for money to cut, Hanson recalls.

“What we were given was a target of about 11.7 percent reduction in our allotments,” he said. That meant a $1.5 million mark for Northland to hit for the 2010 fiscal year. “We achieved that through some efficiencies in course section deliveries. If we had a psychology course that had cap of 40 and we had two sections with about 20 students, we’d reduce it to one section.”

That’s also meant leaving some positions open if people left them. Hanson said he knows his school is the type of institution that people turn to if they lose their job and want to pick up classes or a degree that would provide people with job training. The recession can help keep enrollments for schools like this relatively high, and at Northland, the fact that tuition is holding steady for the second straight year is appealing to prospective students.

“We certainly feel that we will be an important part of retraining people for the downturn in the economy,” Hanson said in an interview.

Edna Szymanski, the new president of Minnesota State University at Moorhead, had a different situation to deal with: a deficit and a subsequent hiring freeze. Between that and the new budget, Szymanski said: “It’s my job to say, ‘No.’”

Szymanski said that she and her fellow system presidents were told to expect bad budgetary news. She said that the previous deficits combined with the new figures will probably mean about a $9 million hit. “It was our job to keep the university alive during the recession and we did.”

Szymanksi said she doesn’t see a lot of competition from other institutions including ones that are right across the river in Fargo, N.D. “[North Dakota State University] is a graduate institution that focuses on research for that state. We primarily provide undergraduate education and some graduate programs.”

The University of Minnesota system was prepared for a cut in the neighborhood of $73 million. The CFO of the system, Richard Pfutzenreuter, told the Star Tribune: “I was just telling someone, well, the front end of the car got taken off, but at least the whole car isn’t destroyed.”

Continuing the analogy, it’s the out-state campuses, like the one that serves Crookston, that are going to have drive this car.

University president Charles Casey said it’s important that people realize that the University of Minnesota includes campuses like his at Crookston, which serves some 1,200 students. Casey says that his campus tries to train students directly for work, and has been dropping two-year degrees in for newer four-year degrees, like Communication.

“Saying I feel a little bit of frustration would be an understatement,” said Casey, who noted that his school has been trying to cast a wider net in its recruitment while also addressing budget realities, like dropping extras such as hockey. Casey said the school is hoping that that scholarship and federal stimulus money will hold tuition down and enrollments steady.

“I think it’s the reality today and we have to deal with the situation we have and not make as many investments as we have in the last couple of years.”

Students, too, are worried about funding levels. Tyler Smith, president-elect of the Minnesota State College Student Association, told the Star Tribune that “we’re still disappointed about the continued cuts to higher education,” fearing big tuition increases in the future and “decreased quality today.”

Meanwhile, the states two university and college systems are looking for a way to handle whatever good news comes along and bracing for more bad news.