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Pawlenty outlines new state cuts in budget showdown with DFL-led legislature

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ST. PAUL -- Local governments and state-funded health-care programs would take the biggest hits in Gov. Tim Pawlenty's new plan to cut nearly $1 billion out of already-passed spending bills.

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Pawlenty's late Saturday afternoon proposal would reduce state aid paid to city and county governments by $450 million, take $250 million from health-care funding, up to $190 million would come out of higher education programs and another $100 million in cuts would come from a variety of other areas.

Pawlenty already chopped $381 million from health care.

The offer was the first movement toward reaching a budget agreement between Republican Pawlenty and the Democratic-controlled Legislature.

Leading Democrats criticized the governor's plan, but it was not immediately clear if they would respond with a counteroffer.

A legislative commission discussed the offer Saturday night, bringing witnesses who generally did not support the deeper cuts.

Lawmakers face a midnight Monday deadline for adjourning for the year. If they do not negotiation a budget deal with Pawlenty by then, the governor says he will make nearly $3 billion in cuts unilaterally to produce a $31 billion, two-year budget.

Pawlenty's proposed $450 million local government cut likely would come in a large part from more than $1.2 billion planned in city payments in the next two years. Revenue Commissioner Ward Einess told the legislative commission that Pawlenty is willing to work with lawmakers to decide just how those cuts would be applied and how much would come from various city and county aid programs.

The University of Minnesota's president said higher education cuts would mean his campuses would need to raise tuition by double-digit percentages.

"It would be an intolerably high level for our students," President Robert Bruininks said.

Minnesota State Colleges and Universities system students could face 5 percent tuition increases next year and another 7 percent increase the following year, Vice Chancellor Laura King said of Pawlenty's new plan. If tuitions do not rise that high, the schools may have to limit the number of students they accept or take some other budget-cutting measures, she added.

Hundreds of college and university employees already face layoffs.

Health and Human Services Commissioner Cal Ludeman said Pawlenty is willing to change a $381 million cut he already made to General Assistance Medical Care grants in 2011, eliminating free health care for about 30,000 poor, childless adults.

Ludeman said the administration is open to discussing what to cut in the new $250 million reduction.

However, Rep. Tom Huntley, DFL-Duluth, said any cuts will result in fewer Minnesotans receiving health care.

Some of the smaller items Pawlenty recommends cutting include $50 million from the renters' tax credit, $10 million by eliminating the political contribution refund and $13 million by cutting state aid to taconite communities.

Pawlenty also proposes to delay $1.8 billion in school payments beyond the next budget cycle as another way to trim spending.

Bills sent to Pawlenty spend $34 billion, but the state only has $31 billion available in revenues for the next two years.

The governor Saturday night rejected three items in the Legislature-passed higher education bill -- $500,000 for scholarships for early-childhood educators, $2 million from the Power of You program and $80,000 for the Cook County Higher Education Board.

Legislative leaders hoped Saturday's discussions would lay groundwork for a budget compromise before a midnight Monday adjournment deadline. Pawlenty put pressure on them Thursday when he announced that short of a last-minute deal he would chop down budget bills on his own, refusing to call lawmakers back to a special session to finish their budget work.

Pawlenty's maneuver is unprecedented by a Minnesota governor.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, questioned Pawlenty's legal ability to make unilateral cuts. "I think he has overemphasized his authority."

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