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How will the shutdown hurt Minnesota? The longer it drags on, the worse it could be

Forum News Service photo by Don Davis

ST. PAUL — As the federal government shutdown continues with no end in sight, Minnesota leaders are preparing to make some tough choices about how the state can pick up the slack.

Every year, Minnesota government serves as a conduit for billions of dollars that “pass through” the state to pay for federal programs. So what happens when that spigot is turned off, even temporarily?

If the funding shutdown is short, state Management and Budget Commissioner Myron Frans says Minnesota resources can fill in the gap for important federal programs like food stamps, road construction dollars or federally funded state employees.

If the shutdown drags on more than a few weeks, that becomes a whole lot more difficult, even when Minnesota has a healthy budget surplus and rainy day fund.

“We just don’t have the money to underwrite the federal government,” Frans said Friday, Dec. 28

He added that Minnesota leaders will be in close contact with the state’s congressional delegation in Washington when the new Congress convenes Jan. 3. If a compromise isn’t on the horizon, “alarm bells” will start going off in state government.

“There’s a point, the end of next week, where we are going to be saying we have to get this resolved,” Frans said. “If we don’t get it resolved soon, we have to start making some hard decisions.”

How did we get here?

This is the second time in 2018 the federal government has shut down over immigration and border security issues. The first happened in January and lasted about three days.

There was also a nine-hour government funding gap in February, but no federal workers were affected.

The current shutdown began Dec. 22 when funding ran out after Democrats in Congress refused to fund the wall President Donald Trump wants to build on the southern border. Trump has said without wall funding the shutdown could last “a very long time.”

It affects about 400,000 workers who have been furloughed from nine federal departments including: Agriculture, Homeland Security, Interior, State, Housing and Urban Development, Transportation, Treasury, Commerce and Justice.

Another 420,000 government employees, including the FBI, CIA and Transportation Security Agency, continue to work but will not get paid until the government reopens.

How will Minnesota be affected?

In the short term, Minnesotans shouldn’t notice much of an impact. Unless they work for one of the affected federal agencies.

Many federal programs are on a sort of "funding autopilot" that should continue. Other programs can be kept going temporarily, sometimes with the help of state resources.

After a few weeks without federal funding, Minnesota leaders will have to ask two questions:

• Can the state continue to make up the funding gap?

• Will the federal government eventually reimburse the state for doing so?

Luckily, state leaders are accustomed to the recent volatility in Washington and have what Frans called a “shutdown playbook” to consult.

But the longer the shutdown goes on, the harder it is to maintain the status quo.

Federal workers miss paychecks, first-time home buyers can’t close on purchases, taxes can’t be filed, national parks close and money for essential federal services begins to dry up.