Government Shutdown in Minnesota: 23,000 of 36,000 State Employees Furloughed; Ohio Privatizes Prisons; Pennsylvania Slashes School Funding

In what we should all hope happens at the national level, Minnesota Shuts Down after failing to pass a balanced budget by the June 30 deadline.

Minnesota's state government began a broad shutdown on Friday going into the July 4th holiday, after Democratic Governor Mark Dayton and Republican legislative leaders failed to reach a budget deal.

Parts of the government had already begun to shut down on Thursday ahead of the midnight budget deadline, including some websites and dozens of highway rest stops on one of the biggest travel days of the year.

The budget impasse means that some 23,000 of the roughly 36,000 Minnesota state employees will be furloughed, and state parks and campgrounds will be closed ahead of what is usually their busiest stretch of the year for the Independence Day holiday.

All but the most critical state functions will be suspended while the spending impasse continues into the new fiscal two-year period that starts on Friday, which would make the 2011 shutdown much broader in scope than one in 2005.

NJ Cuts Aid to Local Governments, Family Planning

Controversial Governor Chris Christie signed a $29.7 billion budget, averting a government shutdown, after slashing $900 million using his line-item veto authority from the budget Democrats had presented to him.

"I will not give in to the Democrats' tax-and-spend agenda no matter how many times they and their allies and special interests demagogue me for refusing to do so," Christie told the Associated Press. "

The new budget adds $150 million in public school financing, and includes $447 million in funding for some of the state’s poorest districts. Among the items cut by Christie were $139 million in aid to local governments, $50 million allocated for crime-fighting initiatives, $7 million for an AIDS drug distribution program, and $3.8 million for Senate and Assembly staff salaries.

Ohio Privatizes Prisons, Sets Plan to Abolish Estate Tax

Ohio Governor John Kasich signed a $55.8 billion budget hours before the midnight deadline, closing an estimated $8 billion deficit without raising state taxes. He used his line-item veto power to eliminate spending on a number of initiatives, including economic development and funding for certain special needs programs.

As part of the plan, the state will privatize five prisons, but the governor vetoed a proposal that would have given the state first choice on repurchasing prisons after they are sold to private parties.

Pennsylvania Budget Slashes Funding for Schools

Pennsylvania Governor Tom Corbett enacted a $27.15 billion state budget, which reduces spending more than $1 billion from the current fiscal year and includes severe cuts to higher and basic education.

Corbett, a Republican whose party controls both houses of the state legislature, signed the budget within an hour of Pennsylvania's midnight deadline for the 2012 fiscal year, which starts July 1.

The governor said the spending plan streamlines government, includes no tax increase and places limits on local property tax increases.

Any property-tax increase above the rate of inflation must be approved by local voters, the governor said.

Praise for Privatizing Prisons

Special praise goes to Ohio Governor John Kasich for privatizing prisons. California desperately needs to do the same. If things go well, Ohio's plan could be and should be a model for other states.

It is time to eliminate massive salaries and pension benefits of prison workers, most of whom are currently way overpaid and equally uneducated with nothing more than high school diplomas.

Hopefully transit workers will be next.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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