Without new state revenues, deep cuts could affect local health care facilities and essential services, says state Sen. Mary Olson, DFL-Bemidji.
"I'm really concerned about the picture that we're going to be facing a couple of years from now if we don't make some responsible decisions now," Olson said Tuesday in a telephone interview.
"I realize that very few people like taxes, and the last thing a legislator wants to have to do is to vote for increased revenue because we certainly all know that's not very popular with people generally," Olson said. "But we also know that there are certain government services that people depend on, and most people think that we can make cuts within government without really impacting the essential services they want."
The Legislature has tried to look at the big picture and tried to minimize cuts, she said. "But there's just no way to cut revenue deeply enough that it wouldn't start to impact some very basic services, like access to hospitals and nursing homes, without either raising revenue or raising some amount of revenue, unless we're going to adopt some proposals by the governor that even his own Republican legislators won't support."
Gov. Tim Pawlenty vetoed the Legislature's tax bill that would increase taxes $1 billion to pay for hospitals, nursing homes and schools.
Republican Pawlenty is relying on taking the Health Care Access Fund, a 2 percent tax on health care providers, into the General Fund, and borrowing $1 billion and paying it back with tobacco settlement monies.
The Health Care Access Fund is "dedicated money, a special tax on doctors and hospitals that is dedicated to health to lower the premiums for working poor Minnesotans," the Bemidji Democrat said. "If we take the money out of that special fund and use it to pay for schools or anything else, then we're really breaking a trust in terms of what we said that money would be used for when we first instituted that fee."
Taking that fund has weak Republican support, she said.
"If we start borrowing ahead on money that we'll be receiving in the future and then having to pay interest on that, we start digging ourselves such a deep hole I don't know how we'll ever get out of it again," Olson said about the governor's proposal to bond for $1 billion.
In putting that concept before the Legislature, "only a couple of Republicans would even support that idea because it's such bad fiscal policy," Olson said.
Plus, the tobacco settlement is only one-time money used to fund operations in just one biennium, while a tax increase is ongoing funding, she said. "If we start doing this, that's how the federal government ended up with such a huge deficit because next year we'd have an even bigger problem to borrow even more money, and we'd have to be paying interest on that money."
The vetoed bill balanced the budget and provided structural balance in to the next biennium, Olson said.
"If the governor doesn't like our proposal, from my perspective, the bal is then in his court to counter back with something that meets the requirements of having structural integrity," she said, "and being a proposal that the Republican members can support."
The governor won't do that, Olson said, "because he says he's not going to raise any taxes and should balance the budget by making cuts, but he doesn't want to be pinned down on where those cuts would come from, because then people see in real terms what those cuts would mean in their lives."
The Senate proposed deeper cuts than either the House or the governor, but without additional revenue, those cuts would have to be even deeper, she said. "I don't know how ... anyone could think we can have it both ways."
Olson voted against the Senate's omnibus health and human services bill but on Monday voted for the conference committee report.
The Senate bill "would have put our health care delivery systems in an unsustainable position," she said. "The (compromise) bill is at least from my perspective a much better bill now because reinstated nursing home rebasement and eliminated a lot of the cuts that were there for nursing homes and hospitals."
It also removes directive language that would require that births be handled in a birthing center by a non-physician medical staff in order to receive state subsidy, she said. To require that would have a large financial impact on North Country Regional Hospital.
But Senate leadership "has warned us to become particularly attached to this bill because, again, without additional revenue, the cuts will go back to the level in the original Senate bill or even worse," she said.
The governor's position "would really be devastating to health care," Olson added. "Considering the realities of the budget that we have, we really done a lot to help protect essential services, but we'll only be able to hang onto that protection if we have some additional revenue."