Pawlenty cuts deep to balance Minnesota budget

By Dustin Kass
dustin.kass@lee.net
The Associated Press
Tuesday, February 16, 2010

Gov. Tim Pawlenty's latest attempt to erase the state's deficit includes $250 million in cuts in state aid benefits to cities and counties, local leaders say.

Pawlenty's proposal will also totally eliminate or reduce state aid benefits to as many as 40,000 people on state welfare and health programs and force state employee layoffs.

The governor Monday outlined his solution to a projected $1.2 billion shortfall, a plan that relies mainly on spending cuts but also on hoped-for money from Washington. The proposal does not include state tax increases, even though it led to levels of cuts Pawlenty said are "dramatic."

"We are not out of balance in terms of the qualities of our amenities - our arts, our culture, our education and many other measurements," Pawlenty said. "We are definitely out of balance when it comes to our tax climate, our business climate and our job climate."

His plan to regain that balance includes another large round of cuts in state aid to municipalities.

City aid payments will be reduced by 11 percent, while counties will receive 7 percent fewer funds.

The $250 million reduction comes on the heels of $300 million in cuts last summer, and while that round of cuts spared cities with fewer than 1,000 residents, this round would not.

The cuts will force many city leaders to find ways to make large cuts to an already approved budget, Mayor Jerry Miller said.

"My thoughts are we have a lot of work to do," Miller said, while noting the governor's plan is not yet binding. "Everything is on the table, and we'll go from there."

"We'll do what we have to do."

The largest reductions - about a quarter of the fix - affect social services benefits programs.

Care providers will see reimbursements fall, eligibility for the MinnesotaCare health insurance program will be restricted, grants for chemical dependency treatment will get pared back and state welfare assistance will be cut.

Jim Miller, executive director of the League of Minnesota Cities, predicted a very dire fallout.

"Either property taxes go up and services get cut or a combination of the two," Miller said, warning that local governments would face no choice but to cut back on two main expenses - public safety and public works.

"If you don't like the condition of the streets now, it's not tough to imagine that they're going to get worse," Miller said.

Pawlenty said he would press lawmakers to fortify already installed property tax limits.

His overall plan got low marks from Democrats in the Legislature.

"More potholes, less police. That's the legacy of this budget," said House Speaker Margaret Anderson Kelliher, a Minneapolis Democrat who is running for governor. "Less health care and state aid. That's what's happening in the Pawlenty budget."

Senate Majority Leader Larry Pogemiller, a Democrat, also questioned Pawlenty's priorities but said the sides should be able to find common ground on half of the fix soon.

Republicans applauded the tax cuts Pawlenty proposed and suggested they would try to go further down that path.

As for his own administration, Pawlenty said state agencies face an average 6 percent budget cut. His direct office will take a $275,000 cut. He said state government layoffs are unavoidable.

"It's not realistic to think that there aren't going to be any lay-offs. And there should be," he said. "If everyone else is going to have to manage with those parameters, government should do the same."

Budget areas spared from cuts include K-12 schools, military and veterans aid programs and state troopers.

Pawlenty's plan would shave $47 million from state college appropria-tions.

Pawlenty said he wanted to cut more but was restricted by federal requirements.

The proposal won't be the final word. Lawmakers will get a chance to reshape it and the deficit projection will change in coming weeks. In early March, a new economic forecast will be issued.

What's more, Pawlenty will cut $387 million more if a Medicaid allowance moving through Congress doesn't materialize.

House Majority Leader Tony Sertich pointed out the irony of Pawlenty relying on federal money as the possible presidential candidate ramps up his criticism of Washington spending.

"It is a budget that is only balanced if we get money from the federal government," Sertich said.

http://www.startribune.com/politics/state/84389002.html