Minnesota bars denied permit renewal as state shutdown continues

MINNEAPOLIS Mon Jul 18, 2011 4:53pm EDT

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MINNEAPOLIS (Reuters) - Minnesota bars, liquor stores and restaurants running low on alcohol because their state buyer's permits have expired cannot renew them before the government shutdown ends, a judge ruled on Monday.

Minnesota's broad government shutdown entered its 18th day on Monday with the governor and legislative leaders trying to hammer out the details of a two-year budget to follow a broad framework agreement they announced last Thursday.

No date has been set for a special session needed to end the shutdown, but Democratic Governor Mark Dayton, House Speaker Kurt Zellers and Senate Majority Leader Amy Koch said Sunday in a joint statement that "considerable progress" had been made on the spending bills.

The debate in Minnesota has mirrored those in the nation's capital over the debt ceiling.

The shutdown has forced closure of state parks, historic sites, rest stops, two horse-racing tracks and the suspension of about 100 road construction projects -- but the threat of beer taps running dry has generated broad attention.

About 300 liquor retailers across the state have been unable to buy more inventory because buyer's identification cards have expired. Another 400 or so businesses could face dwindling inventory if the shutdown continues past August 1.

The buyer's cards must be renewed annually for a $20 fee and most businesses renewed them before the shutdown began on July 1.

While the bars and restaurants cannot buy any alcohol stronger than 3.2 percent without the cards, the impact is strongest on beer because it is perishable and most businesses keep only about a one or two week supply in inventory.

'SIGNIFICANT DAMAGE'

The Minnesota Licensed Beverage Association had asked state court Judge Kathleen Gearin to require the state to process the permits, arguing in part that the businesses would suffer permanent and significant damage.

Former Minnesota Supreme Court Chief Justice Kathleen Blatz, appointed by Gearin to hear appeals for relief from the shutdown, recommended denial of the association's request and Gearin adopted that position.

Blatz wrote that the businesses could be harmed if not crippled, but the "solution to this problem does not rest with the judicial branch but rather those branches charged with enacting the state's budget."

It remains unclear when a special session might be called to vote on the spending bills being crafted to complete the two-year general fund budget of about $35.4 billion.

Proposed special session bills on public safety-judiciary and transportation spending were posted Monday afternoon.

Dayton and the Republican leaders have all said they were unhappy with their proposed budget plan but believed it was a compromise they must support to eliminate a $5 billion budget deficit and end the government shutdown.

The budget framework does not include any of the income tax increases Dayton sought and it has higher spending levels than Republicans wanted. Republican leaders also agreed to give up on some social policy changes they had sought.

The deal proposes to close a $1.4 billion difference between the Dayton and Republican spending plans by delaying $700 million in school payments and issuing $700 million in state debt with revenue from a tobacco industry settlement.

(Reporting by David Bailey; Editing by Jerry Norton)

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