Gov. Tim Pawlenty announced  $271 million in state budget cuts Friday, mostly at the expense of cities, counties, human services programs and higher education.

In addition, Pawlenty is using $155 million in state reserve funds to help close a $426 million budget deficit projected between now and June 30. Cities and counties together will bear the brunt of the reductions, with cities losing $66 million in state aid checks scheduled to be sent next week, and counties losing $44 million.

Pawlenty spared smaller cities -- those with populations under 1,000 -- and smaller counties -- those with populations under 5,000, saying that they had fewer options to absorb state aid cuts. Human services programs will experience $73 million in reductions.

The University of Minnesota and Minnesota State Colleges and Universities each will lose $20 million in state funding. And state agencies will be hit with $40 million in cuts, which will translate into a 10 percent reduction for most state agencies' remaining operating budgets.

Pawlenty said his cuts protect priorities such as military and veterans' programs, public safety and K-12 education. The state is grappling with a two-stage budget shortfall: a $426 million deficit that must be erased by the end of June and a gaping $4.8 billion gap for the coming two-year-budget period.

Pawlenty's proposal wipes out the state's already miniscule $155 million budget reserve _ a move that is required by law before he can make unilateral cuts, known as "unallotments." Typically, budget matters are the prerogative of the Legislature, with the governor either signing or vetoing proposals legislators have passed.

But the law allows the governor to cut the budget on his own authority if the state faces a deficit and if the reserve has been completely spent down first. Friday's proposal comes after a series of meetings with legislative leaders that produced an exchange of ideas, but no negotiated agreement on how to proceed.

That lack of agreement stems, in part, from three different views on how to close the immediate revenue gap. Senate DFL leaders offered an across the board, 1.6 percent cut to unspent state funds, which would have had the effect of cutting $110 million from K-12 schools _ which both House DFL leaders and Pawlenty said was unacceptable.

House DFLers urged Pawlenty to prioritize budget cuts, but also to protect not only education, but health care and local government aid, which would have effectively removed most of the state's budget from consideration.

In a letter to legislative leaders on Thursday, Pawlenty said that the Senate approach would not reflect his own preference for priority budgeting, while the House directives shielded too much of the budget.

In the letter Pawlenty said he would make "modest" cuts to local government aid, which cities, counties and townships use to hold down property taxes while maintaining basic services.

Patricia Lopez • 651-222-1288