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Minnesota budget up to Congress - or not

ST. PAUL - Minnesota legislators begin a week-long break Monday afternoon, and many hope the federal government provides them some good fiscal news soon after they return.

ST. PAUL - Minnesota legislators begin a week-long break Monday afternoon, and many hope the federal government provides them some good fiscal news soon after they return.

But the state's top finance official says they should not count on Washington riding in on a white horse.

If the House and Senate pass a compromise bill Monday cutting $313 million in state spending, as expected, and the governor signs it into law, the state deficit will be close to $700 million.

Sen. Tom Bakk, DFL-Cook, said the recently signed federal health care bill and an upcoming jobs bill could provide that much money to Minnesota, essentially solving the state's immediate budget problem.

"This (legislative) session could end relatively quickly," Bakk said.


Commissioner Tom Hanson of Minnesota Management and Budget said Minnesota Democrats, like those who control Congress, are counting on more money from the new health bill than will be available.

"You do hear a lot of different things from Washington," Hanson said, but the consensus from Pawlenty administration sources, including its Washington office, is that the health bill will result in just a $14 million bump this year and will cost the state $818 million in the next two years.

The federal jobs bill, due for debate in late April, likely will provide Minnesota with $408 million, leaving the state with a $300 million budget hole, Hanson said.

With some lawmakers more optimistic that health funds will prove more lucrative to Minnesota, a sense of wait-and-see surrounds the Legislature, which is scheduled to debate a state jobs bill and the first of three budget-cutting bills Monday before heading out on vacation.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said Senate Democrats do not like using federal money for deficit reduction because it would not be available in the future, creating a larger deficit down the road. But senators are outnumbered by the House and governor, he said, so if the federal money is available, the Senate will plug it into the budget.

Minnesota's budget, like those in most other states, faces a deficit if lawmakers and the governor do not take action. Republican Gov. Tim Pawlenty last summer chopped $2.7 billion out of the two-year budget, an action being reviewed by the state Supreme Court, leaving about $31 billion for the state to spend.

Since Pawlenty's cuts, the deficit has grown nearly $1 billion more, forcing lawmakers and Pawlenty to make new cuts before the Legislature adjourns by May 17. The first third of those cuts is in the budget bill being debated Monday, with legislative leaders promising more cuts in the coming weeks if federal money does not fill the gap.

Bakk, the Senate tax chairman, is one of several who predict federal money could allow lawmakers to head home early.


Don't count Sen. Gary Kubly, DFL-Granite Falls, in that crowd.

"I've been here 14 years," Kubly said. "Every year somebody says that, but we never have. What kind of a database do I have to believe that?"

Hanson, a Capitol veteran, said he has not seen lawmakers go home early since 1996.

Pawlenty himself raises questions about an early adjournment by questioning whether the state really would benefit from federal legislation.

"The federal (health) bill, if states embrace it fully, could cost states a lot of money," the GOP governor said.

Hanson said talk of a federal rescue "is hopeful and wishful thinking."

If Pawlenty and Hanson are right and federal money does not save the state's budget, Republicans expect tax increase proposals from Democrats who control the Legislature.

"There is no plan to do that," Pogemiller insisted.


"That is not on the map for now," added House Majority Leader Tony Sertich, DFL-Chisholm.

But when pressed, Sertich said lawmakers of both parties are not ready to make cuts as deep as needed to balance the budget. That could leave the door open to tax increase proposals that Pawlenty has vowed to veto.

Davis reports for Forum Communications Co.

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