ST. PAUL -- Minnesota legislators and Gov. Tim Pawlenty are making progress in balancing the state budget's $3 billion deficit as a midnight deadline looms.
The governor late this afternoon proposed cutting spending to help balance the state budget, but setting aside controversial health-program changes. Pawlenty said the proposal would plug the nearly $3 billion budget deficit.
Democratic leaders, who control the Legislature, quickly shot a counteroffer back to Pawlenty, agreeing with much of what he suggested. But a controversial health-care provision that Pawlenty wanted to drop would be left available to the governor who takes office in January.
The Pawlenty plan counts on $408 million of federal funds that Congress has yet to approve. If that money does not come through, Pawlenty suggested that he call a special legislative session only for making further health program cuts.
House Majority Leader Tony Sertich, DFL-Chisholm, said that Democrats propose not relying on the federal funds because they do not want a special session.
The Legislature faces a midnight deadline tonight to pass bills. Other than a few small bills, the budget-balancing act is the only issue remaining.
If the budget is not balanced, the state could run out of money to pay its bills this summer and it may become difficult or impossible to sell bonds to finance public works projects around Minnesota.
And if a deal is not reached by midnight, a special session is likely to finish the work.
The biggest stumbling block has been a Democratic proposal to expand health programs for the poor by spending some state money to bring in $1.4 billion federal money. That would be dropped under Pawlenty's plan, but left available under the DFL counteroffer.
Pawlenty and his Republican legislative colleagues strongly objected to a trio of surcharges that Democrats wanted to help fund the expanded programs. Those surcharges would not be pursued under the governor's plan, and Pawlenty said he would agree to not making some health and humans services cuts he wanted.
"I think this is a pathway forward," Pawlenty told reporters shortly after he gave legislative leaders his proposal.
House Minority Leader Kurt Zellers, R-Maple Grove, said the main point of contention in recent days has been health issues.
"Just get back to balancing the budget," he urged.
Pawlenty said his offer was designed to get beyond talking about the same things that were going nowhere.
"We have been talking for days about the same two or three narrow issues," he said. "We are at a point where we have to decide one thing or another."
Sertich said that part of his party's plan would keep General Assistance Medical Care, a health program for the poor, would remain pretty much the same as now but with additional money made available to rural hospitals to take part in the program.
The House leader said he is optimistic about reaching a deal.
"At some point, the governor is going to have to say 'yes' to something," he said.
Pawlenty said there are things he had to give up besides deeper health program cuts. For instance, he said, education reforms he badly wanted are not likely now.
Davis reports for Forum Communications Co.