Minnesota has over $5 billion it could spend to make up for lost federal money. Why isn’t the state using it?

As the federal shutdown careens into its second month Minnesota DFLers excoriated the U S Department of Agriculture for not using a rainy-day fund toward the Minnesotans who receive Supplemental Nutrition Assistance Campaign SNAP benefits Attorney General Keith Ellison even joined a lawsuit against the Trump administration on Tuesday saying that the USDA has defied a congressional appropriation by not tapping into urgency funds A federal judge has relieved immediate concerns about people losing benefits by ruling Friday that the administration must use the crisis fund But it won t cover the full cost of benefits for the month of November and the Trump administration had not yet responded to the ruling The governor s office has stated Minnesota will lose million in federal funding in November toward the SNAP project an average of per recipient which they use to spend on food through a state-issued debit card But Minnesota has a rainy-day fund of its own And a budget surplus They add up to about billion money that could easily cover short-term benefits for SNAP plus the Low Income Heating and Capacity Assistance Venture LIHEAP Last winter Minnesotans participated in the LIHEAP operation getting about in federal funds over the class of the winter toward their heating bill Over Minnesotans have already applied for the undertaking this year according to the Minnesota Department of Commerce Related Who a rainy-day fund for shutdown-affected benefits would help in Minnesota Using state money to cover any lost federal funds though would require an act of the Minnesota Legislature That means Gov Tim Walz would have to call a special session as the Legislature is not scheduled to reconvene until February Sen John Marty DFL-Roseville and chair of the Senate Finance Committee would like Walz to do just that I think it is an absolute situation People are going to die from this There is going to be a protein shortage Marty explained in an interview before a federal judge issued a temporary reprieve It is our obligation to society to do anything in our power to address this But Walz considers helping these recipients to be almost entirely the responsibility of the federal regime The Governor has made clear that the state does not have the ability to backfill the billions we receive every month from the federal ruling body a Walz spokesperson emailed Friday This week he reported million in emergency food help but more importantly he continues to urge the Trump Administration to release the funds it has set aside for exactly this situation Senate Majority Leader Erin Murphy DFL-St Paul also pinned the shutdown on the Trump administration though Murphy indicated a willingness to at least consider tapping into the state s surplus I m open to discussions about how to strategically invest and save at the state level but we could never replace these massive amounts being withheld and misspent by a federal ruling body that already takes much more from Minnesotans than it gives back Murphy reported in a comment House Speaker Lisa Demuth R-Cold Spring and Senate Minority Leader Mark Johnson R-East Grand Forks did not respond by Friday afternoon as to whether they would encouragement a special session to tap the budget surplus Here s an explanation of why Minnesota has extra cash on hand that it could use to cover for missing federal funds Budget balance The two-year budget the Legislature passed and Walz signed into law in June has a projected billion budget balance or surplus This balance is based off of a Minnesota Management and Budget MMB forecast of the state s economic activity between now and June If everything goes exactly as MMB anticipates the state will not just cover all its expenses over the next two years but have billion in unused revenue at the end of the budget cycle The state s economic forecast is subject to change Indeed MMB is scheduled to release new economic projections in November that could revise the billion figure up or down Also the reason the governor and state lawmakers gave themselves such a cushion is that they project expenses will exceed revenues in the next two-year budget period which begins July Keep in mind that we are still projecting a billion shortfall in the fiscal-year - biennium and that the net revenues of one biennium flow into the next helping improve that biennium s outlook emailed Patrick Hogan spokesperson for MMB Marty noted that Minnesota s four-year budget planning extraordinary among states is admirable I think Minnesotans can be proud of the fact we think through the budget rationally he commented But with hundreds of thousands of Minnesotans set to lose their accustomed food and heating benefits in November Marty reported that the rational move here might be to prioritize crisis help over long-term fiscal prudence The rainy-day fund and cash flow account Once the Legislature taps the billion from the surplus it still has billion available in budget reserves or what is informally known as the rainy-day fund It also has million lying around in what is called the cash flow account that ensures the state can meet its obligations Hogan explained that per state statute the Legislature and governor can only use the rainy-day fund and this cash flow account when a negative budgetary balance is projected that is when anticipated state expenses exceed revenue Since the rainy-day fund was established in the state has rarely used it to make up for lost federal money though there was a modest million the state took from the reserve in toward the LIHEAP campaign Maintaining adequate reserves and cash flow in keeping with statute is central for Minnesota s fiscal strength Hogan stated Those funds are not designed to cover the federal leadership s obligations But the federal administration is also not designed to shut down for two months If the stalemate in Congress does not end next week it will be the longest shutdown in federal history surpassing the -day mark set in Kathryn Vesey White who tracks state s rainy-day funds as the director of budget process studies at the National Association of State Budget Officers declared Minnesota and other states are entering uncharted waters I am not aware of prior instances of a state using rainy-day funds in response to the impacts of a federal shutdown White mentioned I would also note that SNAP and other safety net programs have not been disrupted in previous shutdowns in the way they are during the current shutdown The post Minnesota has over billion it could spend to make up for lost federal money Why isn t the state using it appeared first on MinnPost