Lawmakers begin to pick at Pawlenty budget fix

03/11/2008

By BRIAN BAKST,
Associated Press
March 10, 2008


ST. PAUL - Flashpoints in the Minnesota budget debate began to emerge Monday as lawmakers focused intensely on Gov. Tim Pawlenty's proposed spending cuts in health and welfare programs and his decision to leave a shortfall to tackle next year.

As the budget battle officially opened at the Capitol, Pawlenty broadened the playing field by taking his case to the airwaves through a paid radio advertisement.

The immediate task of state leaders is to erase an anticipated $935 million deficit for the budget that runs through June 2009. But there's just as big a problem — perhaps bigger — looming for the next two-year budget that lawmakers hope to chip away at now.

Pawlenty laid out his approach on Friday. He recommended cutting spending to cover roughly one-third of the immediate deficit, drawing $250 million each from a rainy-day reserve and a dedicated health care account and eliminating a corporate tax exemption on overseas income for the rest.

More than half of his recommended cuts come out of health and human services — the wide-ranging category that includes welfare, subsidized health care, hospital grants, chemical dependency treatment and pay for long-term care providers. Many of the same areas were targeted during a 2003 budget fix.

"Time and time again you are going after those who are the most needy," Rep. Nora Slawik told Finance Commissioner Tom Hanson during a House hearing on the Pawlenty budget plan.

Hanson held his ground. He said savings are mostly reaped by canceling planned expansions to programs or by delaying payments to providers.

"If you are currently on a program your benefits aren't cut and you still maintain that coverage," Hanson said. "Nobody who is on that program is eliminated from that program and the benefits they currently get are not reduced."

It's not only reductions to health spending that upset lawmakers.

In the Senate, legislators complained that cuts to court appropriations are misguided at a time when district courts are already limiting their service hours or dealing with case backlogs. Pawlenty's proposal for $52 million in cuts at the public colleges would force tuition up, they said.

The cuts to some areas were magnified because Pawlenty spared K-12 classroom dollars and local government aid from reductions, taking a full 50 percent of the state budget off the table.

Before a Senate committee, Hanson invited lawmakers to tinker with the Pawlenty plan.

"We fully understand it is a two-way street dealing with the Legislature," he said. In the next breath he reminded them, "Anything you subtract from us you have to come up with."

While the Republican governor's plan would fully cover the immediate deficit, his reliance on nonrecurring pots of money like the rainy-day reserves means that it wouldn't fix a structural problem in the budget. That means lawmakers would begin next year's deliberations on a 2010-11 budget facing a nearly $700 deficit, more if inflation were figured in.

Rep. Gene Pelowski, DFL-Winona, accused the administration of offering a shortsighted fix.

"It's a nice soundbite but it's really not a solution to the problem," he said.

Another facet of Pawlenty's proposal also got a cool reaction. He suggested trimming the state sales tax by one-eighth of 1 percent, a savings to consumers of about 2 cents on a $20 purchase. The move would cost the treasury $77 million over the next 16 months and more than twice that in the next budget.

Meanwhile, Pawlenty is trying to push public sentiment to his side with new radio ad that will air statewide on talk radio stations.

"When times are tough, the last thing government should do is raise taxes and add to your burden, Pawlenty says in the ad. "Please call your DFL legislators and tell them you are already paying enough and that you oppose more tax hikes."

His gubernatorial campaign committee is footing the bill; political director Trisha Hamm said the ad will run for several weeks but she wouldn't disclose the amount spent on it.