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House Speaker Margaret Anderson Kelliher, center, briefs reporters Thursday at the state Capitol following a meeting on budget issues with Gov. Tim Pawlenty. Also pictured is Assistant Senate Majority Leader Tarryl Clark, left, and House Majority Leader Tony Sertich. Tribune photo by Don Davis

Pawlenty's cabinet preparing for government shutdown

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ST. PAUL -- Gov. Tim Pawlenty's Cabinet meets today to prepare for a possible government shutdown.

A shutdown is not imminent, the governor's spokesman said, but appears likely if organizations whose budgets Pawlenty unilaterally cut last year go to court seeking to have their funding restored.

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"This is a sign of how serious this is," Brian McClung said. "There simply isn't the money to pay for those programs."

The Minnesota Supreme Court opened the door for that possibility Wednesday when it ruled that Pawlenty's budget cuts, through a process known as unallotment, were illegal.

McClung said Pawlenty has heard from the League of Women Voters and Common Cause asking him to voluntarily turn on funding for the $10.4 million Political Contribution Refund Program.

"We will not be reinstituting the unallotments on our own," McClung said.

McClung said that the ruling applied specifically only to a $5.3 million program that provides diets to 4,300 Minnesotans with medical problems, so the state would not be forced to repay for other programs Pawlenty cut.

There is general agreement that the high court ruling opens the door to lawsuits from any organization cut unilaterally. That means lawmakers must act as though there is an up to $3 billion hole in the budget, said Senate Majority Leader Larry Pogemiller, DFL-Minneapolis.

House Majority Leader Tony Sertich, DFL-Chisholm, said the Cabinet meeting makes sense given the vulnerable position of the state's budget and agreed the court ruling could drain the state's reserves.

"I'm glad they are at least making contingency plans," said House Majority Leader Tony Sertich, DFL-Chisholm. "(Pawlenty) has put the state in a bad financial situation."

On Wednesday, Sertich said he hoped no more organizations file lawsuits seeking unallotted funds. He urged organizations to rescind his unallotments.

The Cabinet meeting announcement came after Pawlenty met with House and Senate leaders for the second time Thursday to discuss the court ruling and how it affects efforts to balance the budget.

Pawlenty canceled a weekend political trip to South Carolina to be available for further meetings with staff and lawmakers, McClung said.

Democrat and Republican leaders said the meetings were productive, but they remain far apart on solutions.

Sertich said he would like to see a solution that involves one-third tax increases, one-third budget cuts and one-third delayed payments.

A tax increase "has to be on the table," he said.

Republican leaders and McClung disagree. They called on the Legislature to vote Pawlenty's cuts into law and urged Democrats not to push for tax increases.

"If you raise taxes during tough economic times you drive any economic development that has started right into the ground," said House Minority Leader Kurt Zellers, R-Maple Grove. "You just cannot do that right now with our economy in this fragile state."

Likewise, Democrats do not plan to ratify the unallotments, at least in full. On Wednesday, Sertich said that he would expect the final budget-balancing solution to look a lot like the budget after Pawlenty's unallotments.

"We have grave concerns about passing that unilateral plan and we are looking for leadership ... about how to solve the fiscal crisis," added House Speaker Margaret Anderson Kelliher, DFL-Minneapolis.

Some legislators and leaders of organizations, however, sound open to living with many of Pawlenty's cuts. Sen. Linda Berglin, DFL- Minneapolis, said she will recommend ratifying all but about $10 million of the governor's cuts to health. Pawlenty cut $236 million in health and human services funding.

As the Senate health finance leader, she is looking for other potential cuts that would allow her to protect money for programs such as food and emergency assistance.

"Most of them are things we are managing to get along with," she said.

Tellijohn reports for Forum Communications Co.

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