As time running out to balance budget, lawmakers weighing up proposal to delay school funds

ST. PAUL -- Minnesota legislators are trying to decide if they can live with a $3 billion budget-balancing solution based on spending cuts and delaying payments to schools.

Backs against the wall
Senate Majority Leader Larry Pogemiller, a Democrat from Minneapolis, briefs reporters Tuesday after meeting with other legislative leaders and Gov. Tim Pawlenty regarding the state budget deficit. Pawlenty earlier in the day vetoed a DFL bill that called for increasing taxes on the state's higher earners. Tribune photo by Don Davis

ST. PAUL -- Minnesota legislators are trying to decide if they can live with a $3 billion budget-balancing solution based on spending cuts and delaying payments to schools.

That was the question legislative leaders were asking the state's 201 lawmakers Tuesday night after two meetings with Gov. Tim Pawlenty, who earlier in the day vetoed an income tax increase proposal passed by the Democratic-controlled Legislature.

The deficit is the only remaining issue in the 2010 legislative session, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said Tuesday night.

"We're positioned to go home if there is an agreement."

The constitution requires the session to end by Monday.


A $1.7 billion delay in state payments to schools is the foundation of the balanced-budget plan being considered. Up to $800 million state spending in most areas of government would have to be cut under the plan, but the question is whether those cuts would be permanent or temporary; Republicans generally favor permanent cuts that would reduce future budgets while Democrats prefer temporary cuts so the money may be there in the future to fund programs.

The $2.5 billion proposal would cover a hole opened last week when the state Supreme Court ruled Pawlenty budget cuts last summer were illegal. Pawlenty spokesman Brian McClung said negotiators have yet to discuss another $500 million budget gap that appeared since last year's Pawlenty cuts.

Republicans, including Pawlenty, refuse to accept higher state taxes, and proposed the plan based on school payment delays and budget cuts. The rejection of new taxes led Democrats to say Republicans need to step forward with ideas.

"We certainly are looking for if maybe there are those Republicans who have some ideas about what to do," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said.

The Senate Republican leader was willing to take on the job.

"If Republicans have to step up and lead the majority, if you will, Republicans will step up," Sen. Dave Senjem, R-Rochester, said.

House Republican leader Kurt Zellers, R-Maple Grove, did not jump at the chance Kelliher presented. Instead, Zellers said, budget talks need to involve five parties: House and Senate DFL and GOP leaders and the Republican governor.

"I don't think anybody should be the one person to solve it," Zellers said.


Rep. Rod Hamilton of Mountain Lake, an assistant GOP leader, entered negotiations for the first time on Tuesday.

"I'm the eternal optimist," Hamilton said, but could offer no specific solutions to the budget problem.

However, he said after leaving budget talks, "everybody is responsible in that room. They are just standing up for what they believe in."

On Monday night, Democrats passed, with no GOP support, a budget-balancing bill that included a tax increase.

The governor vetoed the budget bill Tuesday, saying he could not accept a new, higher, tax on Minnesota couples who make $200,000 a year. He said about 122,000 taxpayers would be affected with an average $2,800 tax increase.

"It is nonsensical to increase taxes on job providers merely weeks after I signed a bill to provide tax incentives for Minnesota businesses to grow jobs," Pawlenty wrote in a letter explaining his veto.

Zellers expressed optimism that budget talks will be more productive after the tax veto. He speculated that Democrats may have had to get the tax increase talk out of their system.

House Majority Leader Tony Sertich, DFL-Chisholm, said the Legislature-passed bill was 85 percent the governor's plan, leaving just 15 percent to negotiate.


The bill Pawlenty vetoed had three major parts, along with some minor fund transfers:

-- $1.7 billion in delayed state payments to schools.

-- $737 million in spending cuts.

-- $445 million in tax increases.

The constitution requires the Legislature to pass all of its bills no later than Sunday, although it can return on Monday for a ceremonial meeting.

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