Pawlenty drops racino plan

06/30/2005

Patricia Lopez and Dane Smith,
Star Tribune
July 1, 2005

With fewer than 12 hours remaining in the two-year fiscal period, Gov. Tim Pawlenty has taken his proposal for a racino off the negotiating table, sparking renewed hope that Minnesota might still avoid its first budget-induced government shutdown.

“The governor holds out a small sliver of hope that this deal could be struck today,” said Brian McClung, Pawlenty’s press secretary. The House and Senate could then craft a “continuing resolution” that would keep state services operating until the deal was formally processed, he said.

Even is a shutdown occurs, however, state parks will almost certainly remain open. The Senate this morning overwhelmingly passed an agriculture, environment and economic development bill that includes the parks appropriation. The House is set to vote on the bill this afternoon and Gov. Tim Pawlenty has said he would sign it.

Senate DFLers, though, appeared to be balking at a plan to give Pawlenty an additional three days to sign the bill - a so-called “bridge bill” - because of concerns that the governor might use the time to line item veto portions of the bill he does not like.

McClung said the racino proposal, which would have put slot machines at Canterbury Park racetrack, was withdrawn during a 7:30 meeting this morning among Pawlenty and the four caucus leaders produced some movement.

Senate Majority Leader Dean Johnson, DFL-Willmar, called the withdrawal of the racino “very significant.”

“It’s now just lying dormant, collecting dust on some shelf,” Johnson said. “I’m sure it will be around for another day but not for the last days of a special session.”

DFLers have opposed the racino from the beginning, but without the $218 million it would have netted the state, Pawlenty also cut his health care offer down a bit, prompting a show of outrage by House Minority Leader Matt Entenza.

“Their new proposal cuts eligibility and benefits,” Entenza said. “They’re going in the wrong direction.”

Pawlenty also dropped his request of yesterday that DFLers choose from among a long list of “reforms,” that included everything from a ban on school-year teacher strikes to a unicameral legislature.

Instead, he focused on a policy change that would give individuals a tax credit for donating up to $1,000 to scholarships that would allow low-income children to attend private schools.

“We think that’s reasonable,” McClung said. “The governor has said all along this should not just be about money and how much we can spend.”

On health care, he said, Pawlenty’s offer would increase annual outpatient benefits for MinnesotaCare to $7,500, from $5,000.

With racino profits, Pawlenty had offered to bump that ceiling up to $10,000 and keep eligibility for the state-subsidized health insurance program at current levels.

The latest offer would cut eligibility to 100 percent of federal poverty guidelines for childless adults and 200 percent of poverty for adults with children. That’s less than the current 175 percent and 225 percent, respectively, but still more generous than Pawlenty’s original proposal, which would have barred childless adults from the program altogether and limited adults with children to 190 percent of poverty.

McClung said administration officials were attempting to determine how many people would lose insurance at the newly proposed levels. Estimates for Pawlenty’s original budget ranged from 22,000 to 40,000.

Senate leaders countered by maintaining the need for 275 percent above poverty for parents and 175 percent above poverty for adults without children.

In addition, the Senate offer continues to lift the $5,000 cap for MinnesotaCare.

Senate leaders say they have come down $351 million on the human services budget and now have no dollar difference with the governor’s proposal. Overall, there remains about a $150 million difference in a $30 billion biennial budget, Johnson said.

“That’s a big cut.... We believe that this is a compromise that should be accepted today,” said Sen. Linda Berglin, lead Senate health negotiator.

At the end of the regular session, in May, Pawlenty’s budget offer totaled $30.49 billion, including racino. Today’s offer totals $30.28 billion. The DFLers’ last proposal totaled $31 billion.

DFLers have asked that no one lose health care and that the benefits cap be removed.

After this morning’s meeting, Entenza said that DFLers want another $160 million for health care, local government aid and to bail out the failing Minneapolis teachers’ pension fund.

He rejected Pawlenty’s call for tuition tax credits as a “radical right-wing concept.”

Entenza at one point said Pawlenty had threatened to withdraw his offer of a $380 million “Health Impact Fee” on cigarettes by midnight tonight unless a deal were reached. DFLers have derided the fee as nothing more than a tax in hiding, since it would boost the per-pack price of cigarettes by 75 cents. McClung said Pawlenty had made no such direct threat although he has inkled for weeks that at some point he might take the fee off the negotiating table.

Both sides said they would continue talking and remained hopeful that even a partial shutdown could be avoided.

Without an agreement, some parts of state government will close starting Friday and thousands of vendors who furnish government services will find their contracts suspended.

Even with passage of the parks bill, an estimated 9,000 state employees could still find themselves temporarily out of work.

Legislators have been meeting in special session since May 23, when they ended a nearly six-month regular session without an agreement on a 2006-07 budget package.