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Progress slow on budget solution

ST. PAUL -- Legislators on an education funding committee took the weekend off.

A spat among Minnesota lawmakers negotiating a health-care spending bill interrupted talks Saturday.

Lawmakers working on a deal to fund agriculture and veterans' programs were in a holding pattern, and other spending bills remained unresolved, a little more than a week before the Legislature must adjourn.

And reaction to Gov. Tim Pawlenty's veto Saturday of a $1 billion tax bill raised questions about whether lawmakers and the governor will come together on a state budget agreement.

Just hours after the Legislature late Friday passed a bill that linked a $1 billion tax increase to school and health-care spending, Pawlenty vetoed the measure as he left home around 3 a.m. for the state fishing opener.

The governor warned lawmakers he would veto it, calling it "hastily processed and ill considered."

"The DFL tax bill was like a bucket of leeches on the taxpayers of Minnesota," Pawlenty spokesman Alex Carey said.

The bill, an alternative to larger tax-raising proposals earlier passed by the House and Senate, would have raised the same amount of revenue Pawlenty proposes to collect through a state borrowing plan that Democrats say cannot pass the Legislature.

The tax plan would have created a new, higher income tax rate for the wealthiest Minnesotans. It also included an alcohol tax increase and a surtax on credit card companies charging customers more than 15 percent interest. The revenue would be divided among public schools, nursing homes and hospitals.

The House approved the tax measure 86-45, the Senate 44-20. Republican Pawlenty rejected it hours later.

House Majority Leader Tony Sertich said an attempted veto override is an option if a deal with Pawlenty cannot be reached.

"We have to weigh, 'Is it going to be easier for the governor to even give an inch or is it going to be easier to get four other legislators to vote to maintain funding for our schools, our hospitals, our nursing homes and for disabled Minnesotans?'" Sertich said. "We'll see in the coming week."

House Minority Leader Marty Seifert said a veto override would not happen because none of his GOP members will vote for it. House Democrats would need Republican votes for an override.

"There's just no way they're going to get this," Seifert, R-Marshall, said. "I think if they just sit on it until the last second, without coming up with good alternatives, they're essentially wasting their time and hanging their hat on a false hope."

The Legislature faces a May 18 deadline to complete a $33 billion two-year state budget and fix a $4.6 billion budget shortfall in the process.

Sen. Rod Skoe, a tax negotiator, said lawmakers must try for a veto override because without new revenue, the only option is more budget reductions. Legislators may not support that, he said.

Skoe, DFL-Clearbrook, and other tax negotiators spent a few hours Saturday putting together a package of mostly non-controversial tax proposals. They plan to finalize that early this week and keep another tax bill ready for use if there is a budget deal before the end of session.

With nine days remaining in the session, there was little urgency Saturday at the Capitol, where a handful of budget committees met but did not plan to finish their work until this week. Others did not meet as top House-Senate negotiators iron out differences that have held up budget agreements for several days or longer.

That includes a bill funding agriculture and military veterans' programs. Rep. Al Juhnke, the House agriculture and veterans committee chairman, said an agreement on that budget area was within reach. But two issues remained unresolved -- a dispute over funding for state veterans homes and whether a new mental health facility for aging veterans slated for Kandiyohi County will go forward this year.

"We're not done," Juhnke, DFL-Willmar, said. "We're close, though."