Budget battle joined again in Minnesota

Prefacing his revised 2010-2011 biennial budget as containing “some good news,” Gov. Tim Pawlenty laid out changes reflecting more than a $1 billion decrease in revenue and expenditures from his January proposal.

The budget change is in response to the state’s February Forecast that foretells of a more than $6 billion deficit for the upcoming biennium. But it also takes into account federal stimulus funds the state expects to receive.

The governor’s spending plan comes in at $32.4 billion over the biennium, which begins July 1. It reflects an approximately 4 percent decrease from the $33.9 billion in General Fund expenditures in the current budget. (Watch the press conference.)

Budget wars: Harsh words on St. Patrick’s Day By Andy Birkey, Minnesota Independent Gov. Tim Pawlenty released his revised budget today, which proposes deeper cuts to health and social services while increasing K-12 education funding levels. Days earlier, Senate DFLers put forward their own proposal, which advocates across-the-board cuts to all state services while adding revenue by taxing Minnesotans with the highest income. The two budgets are very different and led to a war of words in which elected officials saw more red than green on St. Patrick’s Day. At a press conference Tuesday afternoon, Pawlenty said, “Unlike my friends in the DFL, who are proposing to cut education, we are increasing education.” In a followup press release, Pawlenty’s spokesman Brian McClung said, “While DFLers have not issued a priority-based budget, they did make choices. Their plan doesn’t recognize that some parts of the budget are strategically more important. DFLers are choosing social services, welfare and publicly subsidized health care over Minnesota’s K-12 schools and students.” But Sen. Tarryl Clark said the governor’s message is “don’t get sick, don’t get old, don’t lose your job or you’ll lose health care.” Pawlenty told reporters that the DFL budget would raise taxes on those making $65,000 a year, but DFLers said that’s not true. DFL chair Brian Melendez shot back, “Gov. Pawlenty is again spouting his false rhetoric about taxes, misleading Minnesotans for his own political gain. On St. Patrick’s Day, Minnesotans were hoping for a pot of gold from our governor. Instead, we got a crock — of something else. Gov. Pawlenty’s do-over budget again fails to address the economic crisis in a fair, honest, or realistic way.”

His new budget would:

• increase K-12 education funding beyond what was previously proposed;

• restore his January proposed cuts to higher education;

• exempt unemployment insurance benefits from state taxes up to $2,400 per individual;

• provide an addition $10 million for operation of state courts;
• move short-term offenders from county facilities to state prisons;

• provide more than $10 million for a contingency fund to ensure state match for federal stimulus fund grants; and

• reconfigure the General Assistance Medical Care program eliminated hospital and emergency care coverage.

Pawlenty said that his proposal relies on no new taxes, but retains use of in one-time funds gained through the sale of “tobacco appropriation bonds,” that would essentially bond for half of 20 years’ worth of future revenues from the state’s decade-old tobacco settlement.

Although they said they had not seen the governor’s actual budget, House leaders reacted to reports.

House Speaker Margaret Anderson Kelliher (DFL-Mpls) called the governor’s budget “unrealistic” because it relies heavily on one-time revenue including federal stimulus funds and accounting shifts. House Majority Leader Tony Sertich (DFL-Chisholm) said the proposal to increase spending while the state faces a deficit “defies logic.”

House DFL leadership expects to release budget targets by the end of the week.