The Minnesota State Legislature could face cuts to its staff and operations if legislative leaders fail to reach an agreement with Gov. Mark Dayton.

Funding for the Legislature is in limbo after the Minnesota Supreme Court backed Dayton’s line-item veto of the House and Senate’s biennial operating budget. If Dayton and lawmakers don’t reach an agreement by next month, lawmakers’ salaries, staffers’ jobs and the state’s credit rating could all be at risk. 

The Supreme Court order, issued Friday, called for Dayton and legislative leaders to enter mediation to resolve the funding dispute. Dayton originally vetoed the Legislature’s budget in May in hopes of luring lawmakers back to the Capitol to renegotiate certain tax bill provisions.

In a statement Friday, Dayton said he was ready to enter negotiations “immediately.”

“I have asked my legal team to contact their legislative counterparts to begin to resolve this matter,” he said in the statement. 

According to court documents, Minnesota’s 201 elected legislators and 522 full-time staffers will be at risk of operating without funding if no agreement is made.

Hamline University political science professor David Schultz said the mediation order by the Supreme Court won’t be sufficient, adding both Dayton and legislative leaders are unlikely to budge. 

 “I would describe this as a big punt,” Schultz said. 

The court will likely have to make a firm ruling on the dispute, Schultz said, as well as on the constitutionality of Ramsey County District Court’s grant of temporary funding for the Legislature in June. The temporary funding arrangement is set to expire Oct. 1.

 “This [case] has huge implications, not just for the state of Minnesota, or local U.S. government, but certainly sets a precedent on a national level as well,” said Rep. Sarah Anderson, R-Plymouth, chair of the House state government finance committee.

The House’s monthly operating expenses are around $2.7 million, while the Senate’s is approximately $2.5 million. The House and Senate have rollover funds of an estimated $11.3 and $3.9 million, respectively, to bridge any funding loss.

“When you consider that we are funding the staff… those are the people who are going to suffer,” said Rep. Jim Nash, R-Waconia, vice chair of the state government finance committee.

The Senate also pays around $680,000 per month for the Minnesota Senate Building, where they work.

If the payments are not made, the Minnesota Management and Budget office may evict the Senate.

The state financed the Senate building through bonds. Without an operating budget, the Legislature will be unable to pay the building’s debt, said Sen. Kari Dziedzic, DFL-Minneapolis.

Standard & Poor’s, a credit rating agency, warned the state’s credit rating could downgrade “several notches” if payments aren’t made.

“It’s the state’s bond rating,” Dziedzic said. “We worked hard to get the bond rating back up, so we don’t want [it] to impact that.”

According to court documents filed by the Legislature, any downgrade of the state’s credit rating could cause “immediate, long-term, irreparable harm.”

Still, Rep. Gene Pelowski Jr., DFL-Winona, said he thinks the issue will be resolved soon.

“I don’t think anyone’s too concerned about it at this point,” he said.

Dayton and legislative leaders must submit a joint statement on the status of their negotiations to the Supreme Court by Sep. 30. If the matter still isn’t resolved, the two sides must provide a deadline for when negotiations will conclude.