Spending cuts the focus of Minn. budget talks

Published 6:05 pm Saturday, May 16, 2009

Gov. Tim Pawlenty proposed $1 billion in fresh spending cuts Saturday, turning again to local governments, health and welfare programs, colleges and universities to close a budget gap.

Democrats who run the Legislature were weighing the Republican governor’s offer under pressure of a Monday deadline.

Their options are limited after Pawlenty vowed to balance the budget without their consent using line-item vetoes and his authority to delay payments and cancel spending in a deficit. Minnesota’s budget is running $4.6 billion short over the next two years.

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Pawlenty proposed slicing $450 million from cities and counties, $250 million from health and social service programs and $190 million from higher education — areas he targeted for a round of cuts in December and in this year’s budget plan. Another $100 million in savings would come from reducing or eliminating tax credits for renters, political contributors and others.

University of Minnesota President Robert Bruininks said the loss in state aid would result in close to 15 percent tuition increases and layoffs of as many as 750 people, on top of jobs already being eliminated.

“The cuts would be really savage and severe,” he told a legislative commission. “I think they would cost the state money, cost the state opportunity and cost the state additional jobs in the private economy, so I think it’s a really bad bargain for the state to make.”

Cities, hospitals and others were also bracing for worst-case scenarios.

Mayors from around the state urged lawmakers and the governor to settle on a budget fix that would spare cities and counties from the deepest reductions. Such cuts would push up property taxes sharply and slice into police, fire and other city services, they said at a Capitol news conference.

Floodwood Mayor Jeff Kletscher said his city operates close to the wire financially, with little to trim other than two police officers, a maintenance worker, an administrator and four occasional part-timers.

“I can’t afford to lose them, and that’s what cuts in local government aid mean to my small city and many other small cities,” he said. “My toolbox is empty.”

St. Paul Mayor Chris Coleman urged lawmakers and Pawlenty to consider all forms of revenue.

“We have 48 hours to get out of the situation and to do it in a way that doesn’t break the backs of cities across the state of Minnesota,” he said.

DFL leaders met with Pawlenty and top Republican legislators for about an hour earlier in the day. Both sides emerged from the closed-door talks saying roughly the same thing about the overall picture: The GOP governor would agree to a $1.8 billion delay in payments to schools and lawmakers will examine the proposed cuts.

It’s unclear whether Senate Democrats will accept the delayed school payments, a proposal that came from House DFLers. The differences between Pawlenty’s and Democrats’ proposals amount to about $2.7 billion, or roughly $1 billion if Senate DFLers accept the school shift.

Senate Majority Leader Larry Pogemiller said DFL support for the whole approach rests on “budget stability.”

Democrats have been holding out for new revenue. But Pawlenty vetoed a $1 billion package of tax increases on the wealthy, credit card companies and alcohol drinkers.

An override attempt is a long shot in the House, though leaders haven’t ruled it out.

“The governor is very entrenched on his thinking on this. He does not seem to want to budge on it,” said House Speaker Margaret Anderson Kelliher, DFL-Minneapolis. “We are still interested in finding a way to make that happen.”

Proposals to expand gambling and Pawlenty’s plan to borrow $1 billion against the proceeds of tobacco settlement payments are not being considered.

Pawlenty and lawmakers are racing against the clock for a negotiated settlement, if one can be reached. Democrats were holding back on saying if Pawlenty’s offer would lead to a deal.

“If they don’t want to go down that route, the unallotment route is there but it’s a little bumpier ride, I think, and a little bit more turbulence than if we did it legislatively,” said House Minority Leader Marty Seifert, R-Marshall.

Kelliher and Pogemiller said they don’t know if the cuts can pass the Legislature. More talks were possible later Saturday.