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Funding for government lapses as short-term spending bill stalls in the Senate

Budget impasse tackled as Pawlenty, DFL make offers

Health and Human Services Commissioner Cal Ludeman tells a legislative commission Saturday night that Gov. Tim Pawlenty wants to cut $250 million more from his health budget, beyond a $381 million earlier cut. Pioneer Photo/Don Davis

ST. PAUL -- Minnesota legislative leaders and Gov. Tim Pawlenty exchanged budget offers Saturday, but as the day ended they appeared little closer to an agreement to end the legislative session than they have been for months.

Republican Pawlenty made an offer featuring cutting already-passed spending bills further, including money for local governments and health programs. Democrats who control the Legislature oppose both cuts.

Democratic leaders, meanwhile, made a counter offer to raise taxes nearly $1 billion, a proposal Pawlenty long has opposed.

A legislative commission discussed the offer and counteroffer late Saturday.

The offers were the first movements toward reaching a budget agreement as lawmakers face a midnight Monday deadline to adjourn for the year. If lawmakers do not negotiate a budget deal with Pawlenty by then, the governor says that he will make nearly $3 billion in cuts unilaterally to produce a $31 billion, two-year budget.

The late-Saturday DFL offer included a $986 million revenue increase.

"We did not specify what type of revenue that has to be," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said, adding that Pawlenty could call it a fee or anything else, just as long it was new money coming to state government.

But Pawlenty told reporters earlier in the week that he was not interested in any tax or fee increase like that, under any name.

One of the biggest places Pawlenty and Democrats save money is nearly $1.8 billion in delaying state payments to schools. But Democrats insist that delay be accompanied by new taxes or other revenues.

Both sides propose cutting state payments to local governments, but Pawlenty would cut much deeper; the governor proposes cutting $450 million from local governments in the next two years. Most likely would come in a large part from more than $1.2 billion planned in city payments.

Democrats would cut local payments half that amount.

Pawlenty's proposal also would reduce health programs $250 million, cut up to $190 million from higher education programs and another $100 million in cuts would come from a variety of other areas.

Pawlenty already chopped $381 million from health care.

Democrats would not cut education or health care, but would pick up $169 million in unspecified "efficiency reductions in state government." They also call for $52 million in other unspecified budget cuts.

The University of Minnesota's president said higher education cuts would mean his campuses would need to raise tuition by double-digit percentages.

"It would be an intolerably high level for our students," President Robert Bruininks said.

Minnesota State Colleges and Universities system students could face 5 percent tuition increases next year and another 7 percent increase the following year, Vice Chancellor Laura King said of Pawlenty's new plan. If tuitions do not rise that high, the schools may have to limit the number of students they accept or take some other budget-cutting measures, she added.

Hundreds of college and university employees already face layoffs.

Health and Human Services Commissioner Cal Ludeman said Pawlenty is willing to change a $381 million cut he already made to General Assistance Medical Care grants in 2011, eliminating free health care for about 30,000 poor, childless adults.

Ludeman said the administration is open to discussing what to cut in the new $250 million reduction.

However, Rep. Tom Huntley, DFL-Duluth, said any cuts will result in fewer Minnesotans receiving health care.

Some of the smaller items Pawlenty recommends cutting include $50 million from the renters' tax credit, $10 million by eliminating the political contribution refund and $13 million by cutting state aid to taconite communities.

Bills sent to Pawlenty spend $34 billion, but the state only has $31 billion available in revenues for the next two years.

The governor Saturday night rejected three items in the Legislature-passed higher education bill -- $500,000 for scholarships for early-childhood educators, $2 million from the Power of You program and $80,000 for the Cook County Higher Education Board.

Legislative leaders hoped Saturday's discussions would lay groundwork for a budget compromise before a midnight Monday adjournment deadline. Pawlenty put pressure on them Thursday when he announced that short of a last-minute deal he would chop down budget bills on his own, refusing to call lawmakers back to a special session to finish their budget work.

Pawlenty's maneuver is unprecedented by a Minnesota governor.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, questioned Pawlenty's legal ability to make unilateral cuts. "I think he has overemphasized his authority."

The governor is using his line-item veto power to eliminate some spending from budget bills, but he said he also plans to use an executive power that was meant to allow a governor to cut spending in an emergency situation near the end of a budget cycle. He is the first governor to use it at the beginning of a state budget.

Don Davis works for Forum Communications Co., which owns the Bemidji Pioneer.