The Lowdown On Minnesota’s Shutdown and Credit Ratings
Matt | On 08, Jul 2011
Our friends in Minnesota are have had a pretty tough week, at least at the state level.
On July 1, their state government shut down as a result of lawmakers inability to come to an agreement on the $1.4 billion budget gap. State governments, unlike the feds, must balance their budgets each fiscal year. As a result of the shutdown, Fitch debt ratings agency has downgraded the state’s AAA credit rating. Now it’s going to be harder and more costly for the state to borrow money. It also makes the financial markets throw a mean side-eye a governments that can’t get their act together.
You may wonder what exactly a government shutdown at the everyday folks’ level. Well, if you live in Minnesota you haven’t been able to:
- Purchase Minnesota lottery tickets.
- Renew liquor, business, teacher, fishing, nursing, doctor, barber, and other state-level licenses. Driver licenses and tags are exempt.
- Go to work if you work for a state-level agency. Only essential services are reporting during the shutdown.
- Visit state parks and other recreation areas.
As of the time of this post, Minnesota is one week into the shutdown. Republicans and Democrats have yet to agree on a compromise. The governor is a Democrat, but both houses of the Minnesota State Legislature are held by the GOP.
Democratic ideas such as higher taxes for everyone and reduced spending, along with others like healthcare surcharges, a $1 per pack tax on cigarettes, or a temporary tax increase on those earning $1 million or more annually have all been turned down by Republicans.
Republicans have yet to provide their own offer to help address the situation. Why am I not surprised??
Minnesota, and several people have noted this, is eerily similar to how the federal government has been acting lately.