$1 billion in cuts passes first test

Staring down a $6.2 billion deficit, House Republicans took a $1 billion whack at the problem on Thursday, setting a course toward their first showdown with DFL Gov. Mark Dayton.

Led by the new GOP majority, the House voted 68 to 63 to pass a bill that would extend temporary spending cuts imposed last year, including reduced aid to cities and counties that DFLers said could result in multimillion dollar local property tax increases.

Dayton condemned the action as a "piecemeal approach" to balancing the budget but stopped short of a veto threat. "I'm not going to use that language until I see what transpires," the governor said.

That will likely take a couple of weeks. The state Senate is expected to vote on its version of the bill next week, after which the plans will likely land in a conference committee where members from both chambers will reconcile the differences between the bills.

Republicans want to get the bill on Dayton's desk before he unveils his budget in mid-February.

"Those who believe it's simple and easy, I ... hope they can share the magic wand that they evidently possess," Dayton said.

Bumpy budget road

Republicans said the size of the state's budget crisis forced them to act swiftly.

"If we can do a little bit to help us down the bumpy budget road ahead," then it's worth doing, said House Speaker Kurt Zellers, R-Maple Grove.

The proposal extends about $800 million in temporary reductions to government aid, higher education and human services that former Gov. Tim Pawlenty imposed and which DFLers accepted last year. Democrats now say they can't support continuing some of those cuts because federal stimulus money, which has dried up, dulled the brunt of those reductions.

As part of the package, the House would also reduce the state renters' credit and freeze state wages. House Republicans also told Dayton to cut $200 million from state agency budgets by the end of June, but without specifying where to cut.

Republicans said they want those reductions because several departments are sitting on hundreds of millions of dollars in unspent money that they will needlessly spend by the end of June to justify their budgets in the next cycle. Republicans called the phenomenon "Christmas in June," but said they now believe agencies are burning through their extra money in case the bill becomes law, though they offered no proof this was happening.

Local tax hikes ahead?

DFLers warned that much of the unspent money targeted by the GOP is designated for things Minnesotans value and would be alarmed to know could be on the chopping block.

They point to an analysis by Minnesota Management and Budget that showed the state has less than $200 million in uncommitted money. DFLers said cutting that money would hurt veterans, soldiers and college students most.

Targets could include a state soldiers assistance program, which provides emergency financial aid to veterans, along with money for county veterans service officers. DFLers also said there's no guarantee that money designated for flood relief would be spared.

"We were not elected to play budget Whac-A-Mole, to do cuts willy-nilly," said House Minority Leader Paul Thissen, DFL-Minneapolis.

"The only way to eat a hippo is a bite at a time," Holberg said.

DFLers highlighted the cuts to local governments, communities that have already lost millions of dollars in aid as the state's economy sank and the budget dried up. They noted that for every dollar in state aid cuts in the past, property taxes went up nearly 70 cents as local governments tried to pay for services residents expect.

DFLers framed the $487 million cut in government aid as a $300 million property tax increase.

Thissen called it a "reckless bill" that "makes the middle class pay more and get less."

Zellers said it was "very disrespectful" for Democrats to say that cuts result in an automatic property tax hike. He said he trusted local government leaders to make the best decisions for their communities.

House Majority Leader Matt Dean, R-Dellwood, said in the end, legislators will probably look back after the painful road ahead and remember these as the easy trims.

"It's a step in the right direction," he said, "and one I think Gov. Dayton should carefully examine."

Staff writer Brad Schrade contributed to this report.