MPR: State looks at options for helping Northwest

State looks at options for helping Northwest
By Laura McCallum
Minnesota Public Radio
September 21, 2001

The Layoffs | The Workers | The Bailout | The State

Shortly after Northwest announced its layoffs Friday, Gov. Ventura met with Northwest CEO Richard Anderson, and leaders in the Minnesota Senate formed a new panel to look at possible state assistance for the airline industry.

More Northwest Airlines planes will be grounded, as the airline cuts back its schedule by 20 percent, and lays off approximately 20 percent of its workforce.

Northwest's Anderson briefed Gov. Ventura on the airline's financial situation, but didn't ask for anything from the state, according to Ventura spokesman John Wodele. Neither Anderson nor Ventura would comment after the meeting. Wodele says the governor is confident that Anderson is taking the appropriate steps to make the airline strong again after the terrorist attacks. Wodele says Ventura continues to believe that the situation calls for federal action, not state aid.

"If there's something that we can do that is necessary and that Northwest Airlines wants, then we ought to talk about it," Wodele says. "But at this point, it doesn't seem like there is anything on the table that is significant enough, that would have an impact."

Wodele says while the loss of 4,500 jobs is significant, in his words, it's not a crisis. The state gets about 5,000 new unemployment claims per week, and the Department of Economic Security says the addition of 4,500 more could boost the state's unemployment rate from 3.6 percent in August to 3.8 or 3.9 percent. State economist Tom Stinson says the Northwest layoff is the largest Minnesota job loss he can recall, but it won't bring the state's economy to its knees.

"This is a lot different situation than the people in the state of Washington, for example, are seeing - with the projected 30,000 employee layoff of their big employer Boeing," says Stinson.

The governor will meet with finance officials on Monday to discuss the impact of the Northwest job cuts on the state's economy, and a newly-created Senate panel will begin holding hearings on the airline industry next week. Sen. Deanna Wiener, DFL-Eagan, whose district includes the headquarters of Northwest and Sun Country Airlines, will chair the committee. Sun Country is expected to announce layoffs shortly.

Wiener says the Northwest layoffs will have a ripple effect on related industries such as travel agents and the hotel and restaurant business.Wiener says her committee will look at all options for state aid, including tax breaks, restructuring loans made to Northwest in the early 1990s, and extending unemployment benefits.

The House Transportation Finance committee also plans to hold a hearing on possible state assistance. Republican House Speaker Steve Sviggum says while it's premature to consider state aid before the federal government takes action, he says his caucus will consider whether the state should pay some of the costs of increased airport security, and other assistance.
"I think that addressing unemployment benefits is something that can be decided, and we should look at - as well as the potential restructuring of the loan with the state from a few years back," Sviggum says. Sviggum says the layoffs, combined with a sluggish economy, increase the certainty Minnesota will face a budget shortfall for the first time in nearly a decade. He says the state prepared for an economic slowdown by increasing the state's budget reserves, but it may not be enough.

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