Lawmakers sign off on $312 million in cuts

Published 11:45 am Tuesday, March 30, 2010

Minnesota lawmakers signed off Monday on $312 million in cuts to local governments, public colleges, farm programs and more after agreeing with Gov. Tim Pawlenty on the outlines of a partial deficit-reduction plan.

Democrats who run the Legislature pushed the bill through before breaking for a week to observe Passover and Easter. It passed the Senate on a 44-23 vote and the House 76-55. The bill would solve about a third of a projected $1 billion deficit.

The Republican governor said through a spokesman that he plans to sign the bill if the final language lines up with the deal reached over the weekend. Spokesman Brian McClung said Pawlenty preferred a full deficit fix but is “doing our best to work with what they’re offering.”

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The budget bill brings the state’s budget problem below $700 million over the next 14 months. With a healthy dose of federal aid in the congressional pipeline — $400 million or more — Minnesota legislators will have a relatively small gap to confront before the required May 17 adjournment.

“The federal funds coming in give us major relief,” said Rep. Lyndon Carlson, a Democrat who heads the House Finance Committee.

Carlson said the way things are shaping up, the Legislature won’t see a repeat of the tax-increase debate it has had in recent years.

The heaviest blow in the bill is to local government allowances, with $105 million in cutbacks. But that’s far less than the $250 million reduction Pawlenty sought. The state’s public colleges — run by the University of Minnesota and the Minnesota State Colleges and Universities system — would have to get by on a combined $47 million less.

Other cuts touch programs less visible to the public: the state will put off a $260,000 upgrade to its dairy inspection and food monitoring system; the tourism promotion office will have $555,000 less to work with; the Historical Society will feel a $770,000 pinch.

Negotiators blunted some cuts by transferring money from special accounts, like $5 million from a fund meant for petroleum tank cleanup and $10.7 million from a fund usually dedicated for fire safety training.

Republicans criticized Democrats for not putting forward a plan to erase the entire budget shortfall. Rep. Keith Downey of Edina said the majority also hasn’t shown how they will respond if the state Supreme Court invalidates Pawlenty’s use of executive power to cut $2.7 billion last year. A ruling is pending in the lawsuit over the power, called unallotment, and the House has filed a friend-of-the-court brief supporting the legal challenge.

A much bigger deficit is projected for the budget cycle that starts in mid-2011.

“We’ve stood here for 15 months knowing that we’re going to hit that wall and the hurricane’s off shore. It’s nice and sunny today,” Downey said.

House Minority Leader Kurt Zellers said Democratic lawmakers left the tough choices until later and failed to include GOP proposals, such as offering early retirement to state workers or setting up a process to get rid of old programs. The bill “cut a little bit here, a little bit there,” he said. “Why not reform government?”

Carlson, DFL-Crystal, said legislative negotiators finished the bill over the weekend with a handshake between Pawlenty’s chief of staff and his top budget adviser. They dropped a $25 million plan to increase a fee on mutual funds to avoid a veto.

Also Monday, the Legislature sent Pawlenty a bill that would encourage investment and jobs in startup companies, historic buildings and an expanded Mall of America. Pawlenty wrote lawmakers a letter saying he will sign the legislation if it matches up with specific details he requested.

The bill would offer tax credits to investors who put their money in small businesses and historic building projects. The Mall of America could go forward with a planned expansion in phases instead of as a single project. Ford Motor Co. could get tax breaks to keep its St. Paul plant operating.

Rep. Ann Lenczewski, a Bloomington Democrat who sponsored the bill, said it would lead to 5,000 to 12,000 jobs.

A $30 million gas tax credit for the poor would be eliminated to pay for the provisions.