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Pioneer Editorial: Close a gap of $1 billion and it's over

With only five days remaining in the 2009 legislative session, the end game falls on an issue we knew would be the 800-pound gorilla in the living room last January -- to raise or not raise income taxes.

The DFL-controlled Legislature on Wednesday completed its work on the major state funding bills but failed in one essential chore -- deciding on a way to pay for it.

Republican Gov. Tim Pawlenty reminded them of that fact Wednesday afternoon when he sent DFL legislative leaders a letter noting that he was "greatly disappointed the DFL majority has passed spending bills and sent them to me without presenting a viable proposal to pay for them. It appears the total general fund spending for FY 2010-2011 authorized by your bills is approximately $34 billion, while revenues are approximately $31 billion.

"Before we commit the state to write checks from the public checkbook, I need to know how you intend to cover the $3 billion hole in your plan," Gov. Pawlenty adds.

He's right.

The Legislature sent Pawlenty a tax bill last weekend calling for a $1 billion tax increase, which he promptly vetoed in accordance with his long-standing pledge not to raise state taxes. This time, legislators sent him the spending bills but not how to pay for them.

Gov. Pawlenty may outright veto the spending bills as unsupportable, or he may wait until the Legislature decides how to fill the $3 billion hole. It appears both sides may accept a shift paying school districts state aid -- which essentially would force school districts to borrow money -- until the next biennium, which would really leave a $1 billion gap.

There should be enough room for compromise there, perhaps if legislators are more creative in financing. But in the end, it will be up to Gov. Pawlenty to realize that a pledge not to raise taxes can't go on indefinitely.

He may not side with a $1 billion in taxes, but his agreement to some portion of that -- either as bringing fairness with a higher tax bracket for the wealthiest or a temporary tax surcharge that blinks off when the budget is structurally balanced -- could end the session as soon as he signs the bill.

We'd like to be optimistic, but at this point in the session, we'd urge lawmakers not to make any plans for the summer.