No one seems to know what will happen next, now that the Minnesota Supreme Court has said that Gov. Tim Pawlenty's budget unallotment a year ago was illegal.
"I know that it won't be good for us," said Willmar Superintendent Jerry Kjergaard.
The full impact of the ruling was unclear Wednesday afternoon, just hours after the ruling. The lawsuit that led to the Supreme Court decision dealt with a $5.3 million program that provided special diets for people who need them to maintain their health. However, the ruling could potentially affect another $2.7 billion in unallotments Pawlenty made last year.
The unallotment statute gives a Minnesota governor the power to make unilateral budget cuts in cases of unanticipated budget shortfalls. In the 2009 session, Pawlenty approved spending bills from the Legislature. However, he vetoed a tax bill that would have raised enough revenue to balance the state budget. After the session, he balanced the budget through unallotment.
The Supreme Court said Pawlenty misused the statute, which is to be used to address budget emergencies after a balanced budget has been put in place.
Pawlenty's unallotment decisions last year affected cities, counties and schools across the state.
"We certainly didn't like the cuts, nor did anybody, I assume,'' said Benson Mayor Paul Kittelson. "But the point remains, regardless how it's done -- Legislature or governor -- the money isn't there. There are going to have to be cuts. I don't see any advantages coming up for us in the city.''
Benson City Manager Rob Wolfington said the city will definitely be redoing the budget in June after tight controls on spending in the first half of the year.
Willmar City Administrator Michael Schmit said he's not sure the ruling will change much of anything for local governments. Even with the court ruling and if all the Local Government Aid cuts were reinstated, he said, "all that means is that the state's budget deficit is bigger than what they're trying to deal with today.''
In the next state biennium, Schmit said, "they're still going to cut Local Government Aid to trim back that deficit.''
School districts did not technically lose funding through unallotment, but they have been made to wait for 27 percent of their state aid. That aid is to be paid to them in the next fiscal year.
As with city leaders, local superintendents said they don't expect the ruling to improve their financial picture.
Kjergaard said that no school officials expect good news out of the Legislature this year because of the state's budget deficit. Kjergaard heard about the ruling Wednesday morning while in a meeting with school administrators.
Regardless of the impact of the court's decision, he said, schools do not expect to see an improvement in funding
"Any way you look at it, schools are in a tough spot," said Lance Bagstad, Renville County West superintendent.
"It's going to take some time ... to sit down and see how all this change or reform or unallotment is going to affect education," he said. "I don't mind change, as long as it's for the good of kids."
Counties, which provide many of the state's mandated services, have absorbed deep cuts from unallotment and have adjusted their budgets.
Kandiyohi County Administrator Larry Kleindl doesn't expect money to come flooding back to counties because of the court's decision.
"I think we're all waiting to see what steps the Legislature will take," said Kleindl. "The hardest part of this is the unknown."
While not endorsing Pawlenty's use of unallotment, Kleindl said, given the state's current and future deficit, it might be best to let the past unallotment cuts stand "and just move forward."
Kleindl said no matter who does it -- the Legislature, the governor or local government -- when it comes to funding mandated services, "taxes are still being raised to the citizens of the state of Minnesota."
Although past unallotment cuts were painful, Meeker County Administrator Paul Virnig said he's more concerned about new budget cuts that could hit county family service programs.
Virnig said the court's decision should send the message that the budget must be balanced before the session is done and not after the fact.
Tribune staff writers Linda Vanderwerf, Carolyn Lange and David Little contributed to this story.