Legislators end hard year with balanced budget

ST. PAUL -- Minnesota legislators knew they were in for a tough year when they arrived at the Capitol on Feb. 4.

After three and a half months, they needed another 11 hours to finish the hardest job, balancing the state's $3 billion budget deficit. They did that work by delaying $1.9 billion in school payments, to be repaid in the next several years, and forcing nearly $1 billion in spending cuts, mostly in health and human services programs.

The House voted for the bill 97-32 and the Senate 52-14 before adjourning just before 11 a.m. Monday.

Soon after the votes, lawmakers headed home for the year after a few days of intense budget-balancing negotiations.

At the session's start, the budget deficit was at least $1.2 billion, the state Supreme Court was considering whether last summer's spending cuts were legal and gubernatorial politics threatened to disrupt legislative activity with candidates sprinkled throughout the Legislature.

At the session's end, little mattered other than the budget deficit, which had grown to nearly $3 billion due, in part, to the high court throwing out $2.5 billion of Pawlenty's unilateral cuts and an added $500 million deficit after last summer's cuts.

Republicans like Pawlenty were happy with the final budget-balancing bill.

"We were able to resolve the $3 billion budget deficit without raising taxes," Pawlenty said. "We've reached a good outcome for the people of Minnesota."

Leaders of both parties said that given the economy they were satisfied with the result.

House Majority Leader Tony Sertich, DFL-Chisholm, said it was a victory to preserve nursing home and public school funding this year.

"One of the things we talked about is not doing any harm" to businesses and families, Minority Leader Kurt Zellers, R-Maple Grove, said. "That's hard to do when you have a $3 billion deficit."

The agreement requires that school borrowing be paid back in the next two-year budget, Pawlenty said, but Sertich said it more likely will happen over several years.

Negotiations for several days centered on changes Democrats wanted to make in health care programs for the poor and reimbursements to rural hospitals. The logjam broke Sunday afternoon when Pawlenty suggested putting off those controversial decisions and Democrats countered with a plan to make expanding a specific health care program optional.

The exchange of offers eventually resulted in an agreement, but with just 20 minutes left before the constitutional deadline for passing bills, there was not enough time. So with an agreement in hand, Pawlenty called a special session to begin at 12:01 a.m. Monday for the single purpose of passing the budget-balancing bill.

The bill:

? Delays $1.9 billion of state payments to schools from the current two-year budget into future budgets.

? Cuts nearly $1 billion in spending, a figure that includes some other delayed payments.

? Allows Pawlenty or the new governor who takes office in January to take part in an expanded Medical Assistance program with the state spending $188 million to leverage $1.4 billion from Washington.

? Puts $10 million into the General Assistance Medical Care program for the poor; the money will allow 17 hospitals outside the Twin Cities to provide care, while now just four Twin Cities hospitals are in the program.

? Requires $408 million that Congress may appropriate for Minnesota to be used to pay the state's bills.

? Preserves funding for military, public safety, veterans, corrections and nursing homes.

Aid to local governments will be cut more than $300 million because, Pawlenty said, it is one of the few places that the federal government allows the state to cut.

Among the biggest cuts is a $100 million reduction in higher education spending. Also, the renters' refund will be reduced $52 million, and $166 million of sales and corporate tax refunds will be delayed.

Health and human services programs will be cut $85 million, but nursing homes and long-term care facilities are spared reductions and mental health program cuts are minimized, Rep. Tom Huntley, DFL-Duluth, said.

As legislators waited nine hours for the budget bill to be ready, many napped in their chairs, offices or benches in Capitol hallways.

In a House Republican briefing on the budget measure, Rep. Bud Nornes, R-Fergus Falls, briefly passed out, fell and hit his head. He was conscious when an ambulance took him to nearby Regions Hospital, where he was examined. He returned to the Capitol in time to vote on the budget bill and said he was fine.

Monday's special session followed a regular session that centered on money.

Early on, lawmakers passed a nearly $1 billion public works funding plan, known as a bonding bill. Pawlenty vetoed $313 million, saying the measure was too pricey.

Democrats said the bonding bill would produce thousands of jobs. They said the same for another bill that would provide tax breaks for people who invest in businesses.

But while Democrats who run the Legislature claimed success in some areas, they failed on other issues, at least in Republican views.

Pawlenty said he was disappointed that the Legislature failed to approve education reforms, including allowing mid-career professionals to easily become teachers and evaluating teachers on student performance. A Senate bill would have done those, but a House bill fell short of Pawlenty's wishes.

Lack of education reform may have doomed Minnesota's chances of getting $175 million more federal aid because that was based in a large part on reforms. Pawlenty said late Sunday that he had not decided whether to apply for a second round of the Race to the Top education funding.

A much discussed proposal that failed was a new Vikings football stadium. It won a committee vote, but in the face of severe financial problems it never had a real chance.

Don Davis reports for Forum Communications Co.

Here is how local representatives voted on the budget-balancing bill:

Paul Anderson, R-Starbuck, yes

Andrew Falk, DFL-Murdock, yes

Al Juhnke, DFL-Willmar, yes

Lyle Koenen, DFL-Clara City, yes

Dean Urdahl, R-Grove City, yes

Here is how local senators voted on the budget bill:

Steve Dille, R-Dassel, yes

Joe Gimse, R-Willmar, no

Gary Kubly, DFL-Granite Falls, yes