Pawlenty lays out budget shifts, cuts

  • Article by: PATRICIA LOPEZ , Star Tribune
  • Updated: June 17, 2009 - 1:11 PM

The governor maps out a plan to offset the $2.675 billion deficit on his own. He calls the moves targeted and softened. DFLers say the cuts damage the state.

Amid DFL complaints that he had overstepped his authority, Gov. Tim Pawlenty on Tuesday said he would use his emergency budget powers to slash more than $730 million from state spending and employ a massive accounting shift to resolve the state's looming deficit.

Pawlenty said he did his best to soften the impact of the cuts, pushing a good portion into the second year of the two-year budget period that begins in July and exempting hospital patient care, nursing homes and smaller cities and townships.

But the pain will reach many, from disabled Minnesotans who will receive fewer hours of in-home care to students at colleges and universities that will lose another $100 million in state funds. Property taxes may rise for many as larger cities and counties struggle with a $300 million round of unallotments, as the emergency cuts are called.

Smaller, less noticeable cuts abound. The state's political contribution refund, which allowed $50 campaign donations to be reimbursed, will expire. The credit for renters will drop by nearly 30 percent. Grants for chemical dependency, emergency housing and child support collection will all be scaled back, as will some dental care. State agencies, including the governor's own staff, will take a hit.

Additionally, although the short-term effect may be lessened, the long-term consequences could be profound, with a $1.77 billion education accounting shift adding to the money that must be paid back at some future date.

Pawlenty acknowledged that his actions to close the state's $2.7 billion budget gap were not the preferred route, but said that "nearly every state in the union is facing the same or similar budget situations. Minnesotans and people all across this country have faced this economic crisis by tightening their belts. ... I think it's very reasonable for the state of Minnesota to do the same. That means living on a little less for a little while."

The alternative, he said, was "dramatically" increased taxes proposed by DFLers that he said would have made the state uncompetitive and further hinder its economic recovery.

DFLers call it 'somber day'

But DFLers said that the cuts could have been avoided through even modest means and that Pawlenty was setting the stage for hard times long after he departs as governor at the end of 2010.

"This is a really somber day for Minnesota," said Assistant Senate Majority Leader Tarryl Clark, DFL-St. Cloud. "It appears the governor is going to be leaving the state in even a harsher situation than we originally thought."

Along with others, Clark said that while unallotment is an authority granted to the governor, Pawlenty had reached too far.

"He's not a czar, he's not an emperor, he's not a grand pooh-bah," Clark said. "He's a governor. Unallotment's meant to be a scalpel, not an ax, and certainly what we're seeing today is an ax falling."

Clark added that while Pawlenty was attempting to minimize the impact, the toll would be heavy. "This is going to cost jobs around the state," she said. "There's going to be jobs lost at hospitals, in nursing homes, in our schools, in our colleges. Police and fire will be reduced; my guess is, in some communities, libraries and parks will be. Maybe next winter, there'll be some issues that relate to snowplowing."

Pawlenty said DFLers had an interest in dramatizing the effects. "The overall impact of these reductions will be to have state government live on about 96 or 97 percent of what it's living on right now," he said.

The power to unallot is been on the state's books since the 1930s but was used only three times in state history, to modest effect, before Pawlenty took office. This will be his third unallotment in six years as governor and the largest any Minnesota governor has ever attempted.

His unprecedented use of unallotment unleashed some of the harshest invective ever from DFLers.

House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said Pawlenty had done more damage to the state in one hour than in his entire career, while Pawlenty's longtime nemesis, Rep. Tom Rukavina, DFL-Virginia, accused Pawlenty of "lying through his teeth" about the true effect of his cuts.

"The governor is going after seniors, renters, the poor, disabled and mentally ill to pay for the budget deficit he created when he vetoed the Legislature's balanced budget," Rukavina said. "It might help protect his national conservative credentials, but it weakens the Minnesota we all value and cherish."

Rep. Ryan Winkler, DFL-Golden Valley, said Pawlenty "greatly oversteps his limited authority as governor," while Sen. John Marty, DFL-Roseville, compared Pawlenty to the "schoolyard bully picking on the sickest, most vulnerable people in our state."

'Day of reckoning has come'

Pawlenty said at his news conference that he expected criticism of his actions, but that he has been frustrated with legislators' unwillingness to slow down the cost of programs such as General Assistance Medical Care, a program for the indigent that he said was growing 36 percent per two-year budget cycle.

"Now the day of reckoning has come," Pawlenty said. "We have been sounding the alarm for years. Now maybe we've got their attention."

Republicans backed Pawlenty, with outgoing House Minority Leader Marty Seifert, R-Marshall, saying that while unallotment "is not anyone's ideal solution," Pawlenty had imposed needed limits. "Democrats who condemn the governor's actions seem to forget they had more than five months to find a solution."

Pawlenty first spoke of unallotment last month. With days remaining in the legislative session, majority DFLers found themselves with little leverage as the Republican governor vowed to erase the entire remaining projected deficit on his own, barring a budget compromise. The Legislature had by then passed its spending bills without reaching agreement with Pawlenty on new revenues to pay for them.

Since then, hospitals, mayors and university presidents have warned of dire consequences, and legislative leaders have hinted at lawsuits that may challenge Pawlenty's ability to singlehandedly reconstruct the budget. But Pawlenty has remained resolute.

Pawlenty and legislators fought the entire session over whether to increase taxes. The governor shot down every tax plan that DFLers sent him, while they torpedoed his idea to raise about $1 billion by issuing long-term bonds backed by the state's tobacco settlement income.

Legislators will have their first formal crack at Pawlenty's unallotments on Thursday, when the Legislative Advisory Committee will hear the plan. Pawlenty has asked for advice and ideas for possible refinements, but the committee has no ability to alter his plan.

Staff writer Kevin Duchschere contributed to this report. Patricia Lopez • 651-222-1288

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