Democrats began work to pass a third budget bill destined for a veto early today, and the House majority leader brought up the possibility that a special legislative session will be needed to fill a nearly $3 billion budget deficit.
"We are leaning toward a special session," Majority Leader Tony Sertich, DFL-Chisholm, said at 3:30 a.m., just before the House was to take up a budget-balancing bill written by Democrats and opposed by Gov. Tim Pawlenty. "If he just keeps saying 'no,'" Sertich added, there is no other solution.
Negotiations with Democratic legislative leaders, who control of the Legislature, and Republican Pawlenty did not go well late Saturday and early today.
"They have been pretty stuck for a while," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said.
Democrats already have passed two budget-balancing bills, but they included tax increases that Pawlenty rejected. This morning's bill would not increase taxes, but would cut state spending by nearly $1.2 billion.
Those in the high-level talks would say little about what was happening behind closed doors. But they did say the main topic was a health-care bill.
Democrats want a bill that provides some state money to collect $1.4 billion of federal funds. Some Republicans prefer a state-run plan that does not receive federal money.
Rep. Matt Dean, R-Dellwood, said he and others in the negotiations were exchanging information.
"That's progress," House Minority Leader Kurt Zellers, R-Maple Grove, said.
The bill the House and Senate were expected to pass early today, likely with no Republican support, would cut state spending nearly $1.2 billion from the current two-year, $30 billion budget.
Included in the cuts would be an additional half a percent from most state agencies, but no more than 1.5 percent total cuts from today's bill and an earlier one. Public schools, higher education, human services, military and veterans programs are excluded from cuts, although $1.7 billion in state payments to schools would be delayed.
The bill includes opening Medical Assistance health care for poor Minnesotans to more people, which Republicans, including Pawlenty, oppose.
Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said the health-care provision was the only thing discussed in two negotiation sessions.
Pawlenty and lawmakers need to plug a nearly $3 billion budget deficit, with health care part of the budget savings. At the same time, however, Democrats want to spend more state money in order to bring more federal funds to Minnesota.
"In the fiscal straits that we are in, I think we should participate in all federal funds if we can," Pogemiller said.
Sen. Richard Cohen, DFL-St. Paul, said once the health-care controversy is solved, the rest of the budget talks should be simpler.
Discussion of the health issue paused as the House prepared to take up the overall budget bill, but Rep. Tom Huntley, DFL-Duluth, said: "Then we will start negotiating again."
Kelliher said she expected Pawlenty to veto the bill due for debate this morning, and Sertich said another similar bill is possible if negotiations do not go well.
The Legislature must adjourn by midnight tonight.
Just before midnight Saturday, his deadline for making a decision, Pawlenty signed a bill aimed at shoring up three statewide pensions that are in tough shape: Teachers Retirement Association, Minnesota State Retirement System and Public Employees Retirement Association.
The bill reduces future increases in retiree benefits and calls for increased employer and employee contributions.