Veto threat leaves $2.9 billion void

Published 11:00 am Tuesday, May 11, 2010

Gov. Tim Pawlenty planned to strike down a Democratic plan to repair Minnesota’s budget less than a day after lawmakers approved it because the bill includes a tax increase.

Pawlenty spokesman Brian McClung said the Republican governor would veto the bill Tuesday. The Legislature sent it his way Monday night, passing it with only Democratic votes.

The promised veto left state leaders grasping for a way to plug a $2.9 billion hole in the budget and only days to do it. Lawmakers must adjourn their 2010 session by next Monday, although Pawlenty could order them back to the Capitol for an overtime session.

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House Majority Leader Tony Sertich, DFL-Chisholm, acknowledged during Monday’s debate that a veto was certain.

“We’re at a stalemate because the governor hasn’t moved since day one,” Sertich said, adding, “Where has that gotten us members in the last eight years? It’s gotten us into a fiscal mess. We in the Legislature are trying to do something, trying to compromise.”

The Legislature’s budget fix relied mostly on spending cuts and payment deferrals. Pawlenty’s objections centered mainly on a provision creating a new income tax bracket for top earners.

“I know the DFL doesn’t look to me for advice, but here’s a tip: People want government spending cut, not taxes increased,” Pawlenty said Monday.

House Minority Leader Kurt Zellers, R-Maple Grove, said he hopes the veto will cause all sides to get serious about finding a mutually agreeable solution.

“The ‘who wins, who loses’ arguments are now done,” Zellers said. “The public wants us to get our work done and get out of here.”

Democrats have been hammering Pawlenty as being stubborn. They argued that their plan, which would have raised more than $430 million from a new tax, was a fair fix to the latest in a series of budget deficits.

More than 122,000 high-income taxpayers would pay the new 9.1 percent tax, which would go away if the state started running a surplus. Democrats said it would stave off additional cuts to state services for vulnerable residents and ease financial pressure on schools.

“The question is: Are we going to be leaders who stand up and protect people who don’t need our protection,” said Rep. Ryan Winkler, a Golden Valley Democrat, “or are we going to make the choice to be leaders who stand up and vote to protect people who need us?”

It’s not the first time Democrats have tried to impose higher taxes on six-figure incomes as part of a budget fix. Pawlenty has blocked previous efforts, too.

This bill passed 71 to 63 in the House and 34-33 in the Senate. Twenty-eight Democrats sided with all Republicans in opposition.

While the $2.9 billion shortfall through mid-2011 seems daunting, only about one-sixth of a solution is truly in dispute.

Lawmakers appear likely to accept many parts of a previous Pawlenty budget fix, which was undone last week by the state Supreme Court because of the way the governor imposed it. His plan delayed payments to schools and made an array of temporary spending cuts.

There’s also $400 million in federal aid that could arrive from Washington, albeit not in time for the adjournment deadline.

Zellers said his Republican members could agree to a set of contingent cuts that would take effect only if the federal money doesn’t show up. “This is an insurance policy so if the money doesn’t come in, at least you have something in place,” he said.