Pawlenty draws dire economic picture

Painting a dire budget scene, Gov. Tim Pawlenty will start preparing Friday for a possible government shutdown or major cutbacks in government services.

Pawlenty began planning for the worst after Wednesday's Minnesota Supreme Court ruling that his 2009 unilateral budget cutting was illegal. While the 4-3 decision addressed only Pawlenty's cut to a $5.5 million nutrition program, the state could be on the hook to pay more than $1 billion if other plaintiffs come forward.

"I am very worried. It is a huge problem," said Tom Hanson, commissioner of management and budget. Worries about what could lie ahead have kept him from sleeping, he said. "We just can't afford to pay all of this. We just can't."

The state's money woes go beyond a potential cash flow problem. The state's deficit now could be as large as $3 billion. Even before the court decision, legislators and the governor had a $536 million deficit with which to contend.

If they agree on how to close that gap before the session ends on May 17, the money problem would become more manageable. But until then, the pressure is on -- and the clock is ticking.

Pawlenty met with legislative leaders twice Thursday to begin to craft a budget solution. They made little apparent progress.

"We need to help the governor move off his rigid ideological approach. Otherwise this is not solvable," Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said after a morning meeting.

DFL and Republican lawmakers weren't ready to do that Thursday. Pogemiller called that solution neither viable nor wise; earlier this year when the Senate voted on the Pawlenty plan, many Republican legislators opposed it.

Legislative leaders said they plan to count noses to see whether there is enough support now in either the House or the Senate for the governor's plan to pass.

Despite the sobering budget message that was delivered Thursday -- "This is as serious as a heart attack," said House Minority Leader Kurt Zellers, R-Maple Grove -- the day also provided some reasons for hope.

Sen. Linda Berglin, chairwoman of the Senate Health and Human Services Budget Division, said she could cut about $340 million from the budget area she oversees, which includes adoption of most of Pawlenty's 2009 budget cuts.

"I don't think any providers have gone out of business yet," said Berglin, DFL-Minneapolis, although most of the cuts have yet to take effect.

At a Capitol news conference, St. Paul Mayor Chris Coleman and Minneapolis Mayor R.T. Rybak also indicated that they don't plan legal action any time soon.

Pawlenty's solo budget balancing last year, known as unallotment, cut about $300 million from aid to cities and counties. Officials said they can live with that budget bite but could barely survive if cuts go any deeper.

But, Pawlenty administration officials said that Minnesota's budget cannot survive if any other major recipient of state funding comes forward and demands back payment.

The governor called an "emergency cabinet meeting" for Friday morning to talk about "planning in the event of a government shutdown or a reduction of government services," said Brian McClung, Pawlenty's spokesman.

"This is a sign of how serious the situation is," McClung said. Back in 2005, parts of state government shut down after Pawlenty and the Legislature couldn't agree on a budget before the bills came due.

Staff writer Warren Wolfe contributed to this report.