| MINNEAPOLIS, July 15
MINNEAPOLIS, July 15 Although Minnesota reached
a budget deal that will end the longest state government
shutdown in recent memory, it merely pushes long-term fiscal
problems two years down the road, experts said on Friday.
The tentative agreement announced by Democratic Governor
Mark Dayton and Republican legislative leaders on Thursday
relies on delaying payments and borrowing against future
revenues, rather than taking any hard decisions on cutting
spending or raising taxes.
And it will do little to ease the tensions between the two
political parties over fiscal and social policy issues.
"It does nothing to address the fundamental problems the
state has been facing for years," said David Schultz, a Hamline
University professor and expert in Minnesota politics.
The deal in Minnesota comes as President Barack Obama and
Republicans wrestle over higher taxes versus spending cuts as
they try to hammer out a deficit-reduction plan while facing an
Aug. 2 deadline on raising the federal government's debt
In Minnesota, details on spending bills were being hammered
out on Friday and work was expected to continue over the
weekend toward holding a special session as early as Monday
where the budget could be approved to end the shutdown, now in
its third week.
The planned $35.4 billion two-year budget would close a
$1.4 billion gap between Democratic and Republican proposals by
delaying $700 million of payments to schools and issuing $700
million of bonds backed by tobacco settlement money.
"It leaves the structural problem virtually unchanged and
in fact actually makes the structural problem just a little bit
worse looking out into 2014 and 2015," said Tom Stinson, a
University of Minnesota and state economist.
Ratings agency Fitch had stripped Minnesota's AAA bond
rating partly over structural deficits and partly because the
tobacco bond proposal was even on the table, he said.
"It is just not good financial practice to indulge in that
kind of smoke and mirrors," Stinson said.
FISCAL VICTORY FOR REPUBLICANS
The deal includes none of the income tax increases Dayton
had proposed, in a clear fiscal victory for Republicans that
has so far met stiff opposition from Democratic lawmakers.
"They won on this one across the board," Schultz said,
adding that he thought the deal would be approved.
The agreement is expected to exclude big social policy
changes Republicans had sought, such as restrictions on stem
cell research and abortion that were reported as hang-ups in
talks ahead of the shutdown.
Still, Schultz said, Republican lawmakers could bypass
Dayton on policy issues by placing proposed amendments to the
state constitution before voters as they have with a gay
marriage ban amendment for the 2012 general election.
Capital bonding proposals Dayton had made early in the year
were cut in half to $500 million in his latest budget offer,
and are no longer required to complete the deal.
Even if the legislature approved the spending plans on
Monday it could take until the end of the week to get the state
government back up and running, Schultz said.
More than 22,000 state workers were furloughed in the
chaotic government shutdown that started with the new fiscal
year on July 1.
State parks, historic sites and highway rest stops were
closed before the July 4 holiday weekend. The state lottery was
suspended and two horse racing tracks were forced to suspend
operations due to a lack of government oversight.
Only functions deemed critical were continued such as
prison staffing, state police patrols and operations at nursing
and veterans homes. Still, not all prison and police functions
were deemed critical.
About 100 state-funded road construction projects were also
suspended during the shutdown.
(Reporting by David Bailey, Editing by Cynthia Johnston and