Democrats said Tuesday they presented Gov. Tim Pawlenty a balanced state budget but he instead will go it alone, making massive cuts in state spending.
"The Legislature was able to send the governor a complete, balanced budget by last (Monday) night," House Speaker Margaret Anderson Kelliher said Tuesday in Bemidji. "What the governor does with that complete, balanced budget is now in his hands."
Later Tuesday in a St. Paul news conference call, Republican Pawlenty called the bill nothing new than previous tax increase bills and that he planned to veto that one as well.
"We did completely balance this budget, we feel that the job we did do reflected the values of Minnesotans," said Kelliher of Minneapolis, "trying to do our very best in this historic great recession for schools, nursing homes and hospitals."
The last-minute tax bill still called for about $1 billion in new taxes, but at a new tax rate for those making $300,000 more. The additional tax at that level would have been $109, she said.
Pawlenty last week said there would be no special session and no government shutdown, that he would balance the budget himself if he and the Legislature could come to no agreement. It means line-items vetoes of spending bills sent to him, and using the unallotment process to take funds away from authorized programs.
Pawlenty already used his line-item veto on $381 million on a health care program for the poor, and will need to find $2.7 billion more. He probably will shift $1.7 billion in state school aids to the next biennium, forcing school districts to borrow money to pay bills.
"If he signs the bill, there doesn't have to be unallotments," said Senate Majority Leader Larry Pogemiller of Minneapolis.
"Also what doesn't have to happen are severe cuts to Local Government Aid (to cities), which is important to our communities for police, fire, roads, basic services," added House Majority Leader Tony Sertich of Chisholm. "We were able to maintain that relationship between the state and our local communities like Bemidji. We did not cut Local Government Aid. It's a means of keeping property taxes in check."
In his stand last week, Pawlenty said he could cut as much as $450 million from LGA from a $1.2 billion program.
"In the final days, the governor gave us basically two options -- we could either do it his way or he would do it his way," said Assistant Senate Majority Leader Tarryl Clark of St. Cloud. "We thought we should go a third way, which means building off of the bills that were sent and that he signed ... which had cuts that were greater than he proposed, but also ensuring there was some funding stability although nowhere the extent that we think is important."
Revenue increases in the final tax bill "makes sure that further cuts to our hospitals, cuts to seniors, cuts to our communities could be averted," Clark said.
The four DFL leaders did a fly-around Tuesday of Minnesota cities, holding a news conference at the Bemidji Regional Airport.
They said the governor's line-item veto of the General Assistance Medical Care program will cost North Country Health Services up to $4.8 million and St. Joseph's Medical Center in Park Rapids up to $2.8 million.
The governor's proposed LGA cut will take $670,000 from Bemidji, that on top of the $241,000 he unallotted in December to balance the current budget. County Program Aid to Beltrami County could be cut $881,000.
Pawlenty will also unallot higher education funding at $146 million, bringing state aid to 2006 levels and an 11 percent tuition increase for Minnesota State Colleges and Universities students as well as 500 t0 750 lost jobs in the MnSCU and University of Minnesota systems.
"Our jobs base starts with our education system," said Sertich. "If he chooses the path to veto ( the final tax bill), he is vetoing jobs, in the short and long term. ... The governor's unallotment, if he goes down that route, would be very devastating for our colleges. You could see potentially tuition increases in double digits and you could potentially see job losses in the hundreds."
Cuts, vetoes and unallotments mean job losses, Sertich said. "I hope he takes another look and says that's going to be bad for our economy."
Clark said she hopes Pawlenty steps back and looks at the jobs impact of his "go it alone" budget balancing. Cutting $4.8 million in state reimbursements to NCHS, "for Bemidji, is a huge issue," she added.
"He is cutting the poorest of the poor, the sickest of the sick, and in doing so, economically, really taking away thousands of jobs around the state," Clark said. "We hope the governor will put aside some of his other interests and really focus on the interests of our state."
Pawlenty complained that lawmakers sent him spending bills totaling $34 billion when there is only $31 billion in available revenue -- a $3 billion gap that he'll now fix.
The state faces a $6.4 billion deficit of which $2 billion in federal economic stimulus funding will help on a one-time basis. Initially, the Senate offered $2.2 billion in tax increases and the House $1.5 billion, but final offers focused on $1 billion in income tax hikes on the wealthy and boosting alcohol taxes.
Lawmakers entered the session knowing Pawlenty would accept no tax increases, but instead proposed $1 billion in borrowing, paying that back with the annual tobacco settlement the state receives. Lawmakers refused to consider bonding, having failed in the House 130-2.
Permanent new tax revenue is needed to move the state back to fiscal responsibility, after six straight years of deficits, Speaker Kelliher said., "a pay as you go approach."
Instead the governor and legislative Republicans want to go back to borrow and spend, she said.
"The balanced approach included the bill going to the governor, which included one-sixth of the solution being ongoing revenue into the budget," Kelliher said. "One-sixth of that $6 billion gap being ongoing revenue. The rest of that was cuts, deeper than the governor had proposed and some one-time dollars."
Senate Majority Leader Pogemiller said the governor originally proposed $38 million in higher ed cuts, and the Legislature proposed $60 million in cuts, a bill he signed. Now the GOP governor wants to cut $146 million.
"You mathematically cannot balance this budget without permanent revenue," he said. "The type cuts it would take to do that are not acceptable. People won't accept that. And it will devastate our health care system and cause thousands of layoffs in the higher ed system.
"It's not the type of thing that we should do," Pogemiller said.