Legislature: Stalled near the finish line

As DFL lawmakers prepare for a possible special session, Pawlenty's offer to meet them halfway after his veto of their bill gets no takers.

In a day filled with chess moves and counter-moves, Republican Gov. Tim Pawlenty and the DFL-led House and Senate remained at an essential stalemate on Monday, with DFLers beginning preparations for a possible special session.

In what he called "the spirit of compromise," Pawlenty offered his own alternative to the recently vetoed $1 billion DFL tax increase, saying he could meet DFLers halfway, hold down taxes and still balance the budget.

But DFLers quickly trashed the proposal, calling it a false compromise that could further jeopardize the state's financial future and could erode the quality of its services.

As leaders wrangled about the budgetary gap, House and Senate DFLers passed a shrunken health and human services bill Monday evening that they warned would only get worse if no additional revenue was found.

Meanwhile, the Senate passed a "lights on" appropriation bill that would authorize continued spending at current levels -- a measure typically taken as preparation for a special session.

"I would hope we don't need it," said Senate Majority Leader Larry Pogemiller, DFL-Minneapolis. "But we have to be prepared for all possibilities."

Pogemiller said the House would not take up the lights-on bill unless Pawlenty "vetoes a bunch of bills." The bill would provide for basic funding of essential state services until, Pogemiller said, "Pawlenty either calls us into special session or until the next legislative session starts."

Pogemiller said that if DFLers and Pawlenty cannot agree on a balanced budget that erases the state's $4.6 billion deficit by the scheduled May 18 adjournment, "we don't want to be in the position of government closing down because the governor is being inflexible."

The move is the first clear indication that an already grim legislative session may drag on even longer as the two sides search for a way out of the state's financial mess.

Pawlenty plan

Legislators are trying to approve a full budget by midweek to leave time for possible veto-override attempts over the weekend or next Monday, the final day they can meet in their regular session.

Pawlenty's new plan, offered Monday morning, would borrow just under $500 million against future state revenues instead of the nearly $1 billion he had originally proposed. It would adopt the Senate's proposal to drain $250 million from the state's reserve account and would fill in the remainder by acceding to the larger accounting shifts proposed by the House.

The proposal by Pawlenty steps around the cluster of tax increases passed by the House and Senate last week.

But DFL leaders were unimpressed.

"It's a compromise in word, but not in deed," said House Majority Leader Tony Sertich, DFL-Chisholm.

Late in the day, Pogemiller and House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, invited Pawlenty to attend the evening's meeting of the Legislative Commission on Planning and Fiscal Policy, where Kelliher has been leading negotiations with agency heads. The governor said thanks, but no thanks; Management and Budget Commissioner Tom Hanson, he wrote back, would continue to represent him before the commission.

Health and human services

With health and human services accounting for 27 percent of the state budget, the stakes Monday were significant as the House passed the health and human services bill 80 to 51 -- far short of a veto-proof majority.

A short time later, the Senate followed suit and approved the bill 47 to 18.

Under the bill, which had emerged from a House-Senate conference committee, health and human services spending would be about $500 million less than projected totals over the next two years, but it would still increase the total compared with the current, 2008-09 biennium. Under the legislation, spending would total $10.7 billion over the next two years, compared with $9.8 billion in the current budget.

The proposal touched a raw nerve for both political parties. Republicans legislators and Pawlenty argued that health care spending is spiraling out of control and that DFLers are resisting instituting welfare reform, while DFLers said Republicans conveniently tried to portray human services spending as largely welfare costs while ignoring that much more of it includes hospital and nursing home expenses.

"This kind of spending is simply not sustainable," said Rep. Paul Kohls, R-Victoria.

Rep. Larry Hosch, DFL-St. Joseph, said Republicans were obsessed with welfare spending, which he said was a relatively small part of human services spending. Sertich agreed. Welfare spending, he said, was the "ultimate straw man." When reviewing the overall legislation, said Sertich, "think of your grandmother in a nursing home, because that's what it is."

House-Senate conferees, who included Rep. Jim Abeler, R-Anoka, said their plan used $1.8 billion in federal stimulus money and would allow 113,000 Minnesotans to retain health care, a group they said the governor wanted to eliminate from coverage.

Sen. Julie Rosen, R-Fairmont, who was on the conference committee, voted for the bill despite her own concerns that the federal money could create more problems next year.

It was unclear Monday whether Pawlenty, who called for $1.6 billion less in total spending than the conference committee recommended, would sign the legislation. "It spends too much," said Brian McClung, a Pawlenty spokesman. "It could be out of range ... it's not a bill that the governor likes."

Abeler, who last year joined DFLers in overriding the governor on a gasoline tax hike, said there was no attempt by DFLers to placate him on health and human service issues in an attempt to get him to join them again in overriding Pawlenty on the tax bill that the governor vetoed Saturday. "There's no effort to buy my vote," he said.

Also Monday, a bill paying for courts, prisons and state-level law enforcement cleared the Senate on a 36-30 vote, splitting the 46-member DFL majority. Its next stop is the House.

The legislation requires the Department of Corrections to cut daily inmate spending by 1 percent, or 89 cents per prisoner per day.

Staff writer Kevin Duchschere contributed to this story. plopez@startribune.com, 651-222-1210 mkaszuba@startribune.com, 651-222-1673 The AP contributed to this report

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