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Koenen says counties will feel state's pain

GRANITE FALLS -- Counties are sure to feel the state's financial pain, perhaps even before the Legislature convenes, State Rep. Lyle Koenen, DFL-Clara City, warned the Yellow Medicine County Board of Commissioners on Tuesday.

Koenen told the commissioners that he expects Gov. Tim Pawlenty to use his authority to begin making budget cuts, or "unallotments," to begin balancing the budget before year's end.

The state's projected budget deficit for this biennium was pegged less than two weeks ago at $426 million. A new projection indicates the deficit has grown by another $32 million, and the trend continues toward an even larger gap, Koenen told the commissioners.

The state has roughly $900 million in unencumbered funds at this point. That includes somewhere between $100 million to $150 million in local government aid for cities and counties.

No matter what the governor might do to balance the budget, the worst is sure to follow, according to Koenen.

"It's going to be miserable," he said of the budget decisions facing legislators when they convene in January.

Legislators will begin dealing with new projections that now anticipate a $6 billion to $7 billion deficit for the following biennium, according to Koenen.

He said he anticipates cuts in "all areas, whether we like it or not."

Koenen pointed out that education and health care expenditures represent nearly 70 percent of overall state government spending, and they are not likely to escape cuts.

He said there are likely to be efforts to also find new sources of revenue. One idea already being considered would extend the sales tax to services.

Gov. Pawlenty has indicated his opposition to any tax increases, but Koenen said the governor compromised at the end of the last session and could again. If the governor refuses to consider anything but cuts, "we could be in trouble," Koenen said.

The county commissioners noted that the county has kept its budget in the black and has been building a reserve, but now commissioners fear the state will address some of its problems at the expense of counties. "You are going to put us into the same state you are now," said Commissioner Gary Johnson of Clarkfield.