Record deficit forces the gov. to look at cuts in numerous budget areas
ST. PAUL -- Gov. Tim Pawlenty would chop many parts of the state budget -- including dropping 84,000 people off state-funded health care programs -- but promises to increase public school funding and keeping public safety programs mostly untouched.
The Republican governor's solution to a nearly $5 billion deficit that most experts expect to grow dramatically in coming weeks included deep cuts in state aid to cities, eliminating boards governing humanities and arts programs and a 5 percent cut in most government programs. He gains $1.3 billion by delaying some state payments to schools.
Even with thousands losing health care funding, health and human services spending would rise 9.6 percent under the Pawlenty proposal. Public school funding would go up 1.9 percent.
Pawlenty's proposed budget would spend $33.6 billion in the two years beginning July 1. The current budget is $34.4 billion, but an economic recession has reduced the amount of taxes and other revenue flowing to state government.
Legislators who must approve a budget said they had few details of the Republican governor's plan and mostly held off on criticism, but city leaders were highly critical of what they called a devastating funding cut.
Pawlenty touted the fact that his plan would not raise taxes, and would cut many business taxes. He said the state must "live within its means."
Balancing the budget will not be easy, the second-term governor said.
"This is a challenge," he said. "It is going to take strength. It is going to take courage."
Highlights of Pawlenty's two-year plan include:
- Spending $41.5 million more on public education and requiring all school districts to pay teachers based on their performance, not on seniority. Some districts are doing that now, but he would force all districts into his Q Comp program, giving many districts $300 per student more. Another bonus would be possible when students meet certain academic standards.
- Children would remain covered by state health-care programs, but 84,000 adults would lose care, Human Services Commissioner Cal Ludeman said.
- State aid paid to cities would fall 25 percent, with the bulk in the second year of the budget. City officials say that means parks programs and libraries might close, snow removal would be delayed and police and fire protection may suffer.
- An 8.2 percent higher education funding drop should not be covered by higher tuitions, the governor said, adding he wants tuition increases limited to the inflation rate.
- While most health-care provides paid by state programs would see a 3 percent cut in payments, nursing home rates would be frozen.
- The state would use $920 million of expected federal economic recovery funds to help balance the budget.
- Pawlenty wants pay of all government employees, from the local level on up, to be frozen, but so far has stopped short of formally proposing that.
- Pawlenty proposes a different way to pay for public works projects, borrowing $1 billion against payments coming in from a 1998 settlement with big tobacco companies.
- Among programs eliminated would be the state Arts Board and Humanities Commission, House Minority Leader Marty Seifert, R-Marshall, said. Many small boards would face the same fate and state agencies overall would lose 5 percent of their budgets.
Pawlenty said the financial problem is simple: Two years ago, the economy grew at a 2.1 percent annual clip; now the economy is shrinking by 2.5 percent. Fewer Minnesotans have jobs today.
Democratic-Farmer-Labor Party leaders, who control the Legislature, plan to get public reaction to the governor's proposal by holding legislative hearings around the state, starting in about two weeks.
House Majority Leader Tony Sertich, DFL-Chisholm, offered the strongest legislative criticism, saying he fears the Pawlenty plan will boost local property taxes, increase college tuitions and force needy people off health programs.
"What we don't want to happen is any ponzi schemes in the governor's budget," Sertich said, referring to an investment fraud in the news recently.
Legislative Republicans liked what they saw in the Pawlenty budget, but not necessarily everything.
"I'm hoping it gets a little better," Assistant Senate Minority Leader Joe Gimse, R-Willmar, said of local government aids.