As you may have heard by now, Judge Kathleen Gearin of the Ramsey County District Court issued an order granting a temporary restraining order in the unallotment lawsuit. This lawsuit was filed in October by a group of low income individuals who had suffered as a result of the unallotment of the Minnesota Supplemental Aid Special Diet Program (MSASD) and the Renters Property Tax Refund Credit. The Court found that the Governor’s July unallotment actions violated the Minnesota Constitution, but the relief ordered is very narrow. It will not have an immediate effect on cities, but it will likely have a longer term impact on cities.

To understand the implications of this decision for cities, it is important to understand what the Court’s order and supporting memorandum did and did not do:

  • Although the Court found that the July 2009 unallotment was unconstitutional (i.e., illegal), it limited the relief granted to the specific claims raised in the temporary restraining order. It ordered the Minnesota Department of Management and Budget to reinstate unallotments to the MSASD only and to stop further unallotments to that program only.
  • The order does notreverse or stop any of the other unallotment decisions. In other words, the order does not restore the 2009 Local Government Aid that was unalloted and does not prevent the 2010 LGA unallotments from happening. To achieve that result, cities would need to file a separate lawsuit and/or intervene in the current lawsuit.
  • Although the order for relief does not apply to any of the other unallotment decisions, the legal principals would apply to other affected parties who choose to file suit or intervene in the current lawsuit. Because of the timing, however, other parties may or may not have their entire unallotments reversed or reinstated.
  • The Court did notfind that the unallotment statute is illegal. The Court found that the “specific manner” in which the Governor used his unallotment power in June and July 2009 violated the constitution. Thus, the Governor can still use the unallotment power in the future, just not in this same manner (i.e., this Governor and future governors may not use it at the beginning of a biennium when the budget deficit is known in advance as a means to avoid reaching a budgetary agreement with the Legislature).
  • The Court specifically acknowledged that the budget forecast has changed dramatically and the Governor could likely unallot appropriations based on the November budget forecast.

What happens next will depend on a variety of factors including whether other parties decide to jump into the lawsuit, if the Governor appeals the decision as he announced last week, and how quickly that appeal moves through the court system. Regardless of the actions that cities take in response to this ruling, there is a strong possibility that 2010 LGA payments will be affected, either by a court ruling, by legislative action, or by gubernatorial action. The CGMC Board will be reviewing the decision and deliberating whether any course of action should be taken by the CGMC.