Sertich brings up special session

ST. PAUL -- Democrats passed a third budget bill destined for a veto early today, and the House majority leader brought up the possibility that a special legislative session will be needed to fill a nearly $3 billion budget deficit.

The state constitution requires lawmakers to finish passing bills by midnight tonight.

"We are leaning toward a special session," Majority Leader Tony Sertich, DFL-Chisholm, said at 3:30 a.m., a couple hours before the House took up a budget-balancing bill written by Democrats and opposed by Gov. Tim Pawlenty. "If he just keeps saying 'no,'" Sertich added, there is no other solution.

Sertich said the bill is more than 90 percent of what Pawlenty wants.

Negotiations with Democratic legislative leaders, who control the Legislature, and Republican Pawlenty did not go well late Saturday and early today.

"They have been pretty stuck for a while," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said.

Democrats already have passed two budget-balancing bills, but they included tax increases that Republican Pawlenty rejected. This morning's bill would not increase taxes, but would cut state spending $800 million, in some cases by delaying state payments.

The House passed the bill 82-49, the Senate 46-21 at about 6 a.m. Both were mostly party-line votes, Democrats in favor and Republicans opposed.

Even Democrats who supported the bill said it will be vetoed.

Those in the high-level talks would say little about what was happening behind closed doors during negotiations. But they did say the main topic was a health-care bill.

The Democrats' bill would spend $188 million to expand health care programs for the poor in an effort to collect $1.4 billion in federal funds. Some Republicans prefer a state-run plan that does not receive federal money.

"Voting for this bill means better reimbursement for your rural hospitals," Rep. Tom Huntley, DFL-Duluth, said.

Rep. Matt Dean, R-Dellwood, said he and others in the negotiations were exchanging information.

"That's progress," House Minority Leader Kurt Zellers, R-Maple Grove, added.

The bill the House and Senate passed early today would cut state spending $800 million from the current two-year, $30 billion budget.

Included in the cuts would be an additional half a percent from most state agencies, but no more than 1.5 percent total cuts from today's bill and an earlier one. Public schools, higher education, human services, military and veterans programs are excluded from cuts, although $1.9 billion in state payments to schools would be delayed.

If the budget is not balanced, the state could have difficulty paying its bills as early as this summer.

Republicans complained that the measure would greatly increase the state deficit in the next budge

"This is not a solution," Rep. Paul Kohls, R-Victoria, said.

Sertich said the bill is the third lawmakers sent to Pawlenty. He vetoed the first two, saying he opposed tax increases they contained. The new bill does not raise taxes. "What more can we do as a Legislature?" he asked.

The bill is "virtually exactly what the governor wanted," Sertich said.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said the health-care provision was the only thing discussed in two negotiation sessions.

Pawlenty and lawmakers need to plug a nearly $3 billion budget deficit, with health care part of the budget savings. At the same time, however, Democrats want to spend more state money in order to bring more federal funds to Minnesota.

"In the fiscal straits that we are in, I think we should participate in all federal funds if we can," Pogemiller said.

The expanded federal program would bring in people already in other state health programs, General Assistance Medical Care and MinnesotaCare.

Negotiations about the health issue paused as the House prepared to take up the overall budget bill, but Huntley said: "Then we will start negotiating again."

Kelliher said she expected Pawlenty to veto the bill passed this morning, and Sertich said another similar bill is possible if negotiations do not go well.

The Legislature must adjourn by midnight tonight.

Just before midnight Saturday, his deadline for making a decision, Pawlenty signed a bill aimed at shoring up three statewide pensions that are in tough shape: Teachers Retirement Association, Minnesota State Retirement System and Public Employees Retirement Association.

The bill reduces future increases in retiree benefits and calls for increased employer and employee contributions.

Andrew Tellijohn contributed to this story. Tellijohn and Davis report for Forum Communications Co.