Health care and social programs will take the biggest hit in the state

WASHINGTON - President Bush's effort to slow the growth of federal spending on health care and other domestic programs could put the squeeze on state budgets in Minnesota and nationwide.

But the budget proposal released Monday also provides funding for some long-planned projects in Minnesota, including the remaining $71.2 million for the Northstar Commuter Rail project from Minneapolis to Big Lake.

The president's $3.1 trillion budget proposal for fiscal 2009, which starts Oct. 1, targets a number of education, housing and health care programs -- including Medicare and Medicaid -- to put the federal budget in the black by 2012.

Minnesota Democrats criticized the five-year plan for cutting needed social programs while still leaving a record $407 billion budget deficit after the president leaves office in January. Many Republicans, including Minnesota Gov. Tim Pawlenty, stayed out of the budget fray, saying they were still analyzing the numbers.

In Minnesota, federal aid for children's health insurance would be virtually frozen next year, as would family assistance grants and child-care and development block grants, according to Bush administration documents.

The state would also see real cuts in heating assistance, rent-assistance vouchers and community development block grants, which local officials use to fund a wide array of social services.

And even as the Bush administration is proposing increases in military and Homeland Security funding, programs to help local police and fire departments would suffer cuts. For example, the Byrne Justice Assistance Grants for crime-fighting efforts are slated to take a $2.5 million trim in Minnesota; assistance to Minnesota firefighters would be reduced by nearly $14 million.

School lunch programs would actually get a little more money, as would nutrition programs for indigent women and children, as well as special education grants for schools.

Overall, federal aid for programs administered by the states would nudge up $13.5 billion nationally, with Minnesota's share of the increase estimated at $324 million, budget documents show. At the same time, growth in broad federal health care initiatives next year is slated to be trimmed by $14.2 billion, prompting Minnesota officials on both sides of the aisle to raise concerns.

"From health care, to energy independence, to safety on our streets, this budget is out of touch with the values that I hear when talking to the people of Minnesota," said Sen. Amy Klobuchar, a Democrat.

Sen. Norm Coleman, a Republican up for reelection this year, said he was encouraged by the administration's efforts to balance the budget in five years without raising taxes.

"Clearly, we need to take a hard look at entitlement spending," Coleman said. "I am concerned, however, that the reductions proposed by the president's budget could result in diminished ... health care for our most vulnerable populations."

"Basically, they're targeting low-income folks, seniors and people with disabilities to make the cuts," said Steve Francisco, federal policy director for the Minnesota Council of Nonprofits. "It's going to make it tougher for the states to provide health care for seniors."

But there was general agreement that the Democratic majority Congress is unlikely to agree to many of the deepest cuts. "It's a meaningless document," said Rep. Betty McCollum. "Congress will set a new course and determine next year's spending priorities based on the real needs of the American people."