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Gov. Tim Pawlenty announces Thursday that he will sign all legislative-passed budget bills, with some things removed, and make cuts on his own to balance the state budget. The move sent shock waves through the Capitol. Sen. David Hann of Eden Prairie is on the left. Don Davis/Minn. State Capitol Bureau
Gov. Tim Pawlenty announces Thursday that he will sign all legislative-passed budget bills, with some things removed, and make cuts on his own to balance the state budget. The move sent shock waves through the Capitol. Sen. David Hann of Eden Prairie is on the left. Don Davis/Minn. State Capitol Bureau

Pawlenty starts cutting budget himself

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news Farmington, 55024

Farmington Minnesota P.O. Box 192 / 312 Oak St. 55024

ST. PAUL - Gov. Tim Pawlenty has started his quest to cut billions of dollars from state government spending if budget negotiations fail in the legislative session's final four days.

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While saying he remains open to compromise with Democratic-Farmer-Laborite leaders, the Republican governor said he will use his line-item veto power and other budget-cutting authority to set a new state budget if the Legislature will not work with him "on a reasonable budget solution."

"This year, politics as usual around this place is over," Pawlenty declared in a late Thursday afternoon surprise announcement. "There will be no special session. There will be no government shutdown. And there will be a budget that lives within the means of Minnesota's taxpayers and the revenues available to the state of Minnesota."

Pawlenty said he will trim the budget two ways:

-- Line-item veto items out of budget bills lawmakers already have sent to him. That authority is limited to just some budget items.

-- After the partial vetoes, he will unallot. That is a legal way to unilaterally reduce spending to match revenues, a procedure designed to balance a budget in changing economic times.

Bills lawmakers passed would spend $34 billion in the next two years, but just $31 billion in revenue is expected without new revenues.

House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, called Pawlenty a bully for his actions. She said Pawlenty's plan would cut 10 times more money from the budget than has any other governor. And, she added, Pawlenty will have used unallotment three of the five times it was been used in state history.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said he expects Pawlenty to change his tune. "I assume as the governor of the state he will calm down and get his wits about himself."

In a tense evening meeting, Kelliher told Commissioner Tom Hanson of Minnesota Management and Budget that Minnesotans deserve to know what Pawlenty will cut. Hanson said the exact cuts still are being considered and "in the days to come we can share more detail."

Kelliher responded: "I think it would be good to have details within the next 24 hours, otherwise it would appear ... the governor is going it alone."

Hanson and Pawlenty criticized the Legislature for passing a budget with a $3 billion funding shortage.

City and union leaders were upset with prospects of losing money.

"The real losers in this failure to compromise are property taxpayers and Minnesota families who depend on critical services like police and fire protection," Wadena Mayor Wayne Wolden said for the Coalition of Greater Minnesota Cities. "If the governor takes critical local government aid, Minnesotans need to brace for the largest property tax increases in state history - and devastating cuts local police, fire, libraries and community services."

Pawlenty refused to tell reporters precisely what he will cut, but did say local aid payments will be cut or delayed. The governor promised to give local governments advance notice before the cuts become effective July 1.

Eliot Seide of the American Federation of State, County and Municipal Employees said Pawlenty thinks "he can suspend democracy."

"It is the height of arrogance to act in this dictatorial fashion," Seide said.

Pawlenty's first cuts came late Thursday in a health and human services funding bill as he cut more than $381 million. That is from $10.7 billion in state funds.

The money was taken from General Assistance Medical Care grants, and Pawlenty said more cuts will come when he unallots later.

It was not immediately clear how many Minnesotans could lose health-care payments with his line-item veto. However, Pawlenty said in a veto letter, those that lose aid could sign up for state-subsidized MinnesotaCare insurance.

Pawlenty also erased six areas of spending from an economic development bill, including jobs programs for American Indians and Southeast Asians. He also axed money intended for programs to attract films and television programs, a construction workers' memorial, public radio and a legislative commission that he said already has enough money

Pawlenty said he will sign every budget bill legislators passed, although he will cut what he can with his line-item veto power. Then he will take a new look at the budget and use his unallotment power to make further cuts down to the $31 billion "and change" level, he said.

On a public works bill, Pawlenty promises "numerous line-item vetoes," but he would not be specific. However, Pawlenty spoke highly of flood prevention measures including in the bill, indicating that money may be safe from cuts.

The biggest problem has been a disagreement between Pawlenty and Democrats over tax increases. The House voted for a $1.5 billion tax increase, upping a variety of taxes, while senators focused on raising income taxes $2.2 billion.

Pawlenty vetoed a $1 billion tax increase legislators passed. That and delayed payments to school districts represent most of the $3 billion difference between Pawlenty and the DFL.

Since lawmakers came into session on Jan. 6, they have known the state faces a $4.6 billion deficit. Some of that budget hole was eased by federal economic stimulus funds, probably coming only this year.

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Legislators were taken aback by Pawlenty's decision.

"We'll have to ponder that a little bit," Rep. Bill Hilty, DFL-Finlayson, said. "Somehow that doesn't strike me as the best approach."

Hilty said that a tax increase may be the only way to bridge the fiscal gap: "I'm not sure there is much left."

House Minority Leader Marty Seifert, R-Marshall, said time remains for negotiations between Pawlenty and DFL leaders.

"The door is open and the phone is on if the Democrats are interested in a balanced budget," he said.

House Majority Leader Tony Sertich, DFL-Chisholm, said Minnesotans should know what specifically Pawlenty would cut from the budget after lawmakers leave St. Paul.

"If the governor's offer comes true and we go down this road, it will just be him making these decisions behind closed doors that will impact millions of Minnesotans," Sertich said. "We think that's wrong."

The governor's decision is a signal he will not agree with Democrats on a budget plan, Sen. Keith Langseth, DFL-Glyndon, said.

Democrats will work on an alternative plan to balance the budget in the session's final days, Langseth predicted.

"He can just veto anything he wants to veto anyway," he said.

Langseth, who leads the Senate's public works committee, said that if the governor strikes spending for certain projects in a public works package, the Legislature will not attempt to override those line-item vetoes.

Langseth said he was not surprised by Pawlenty's decision.

"It's just his way, and that's it," Langseth said. "Democracy to him means absolutely nothing."

"It's typical Tim Pawlenty - 'my way or the highway,'" Langseth added.

Pawlenty's decision surprised rank-and-file Republican lawmakers, who were called into his office to hear about the plan shortly before the governor unveiled it to reporters.

"It's unique - to say the least," Rep. Larry Howes said.

Howes, R-Walker, said he never has seen a budget-balancing plan like Pawlenty's, but a major move was needed if there is a chance to reach a compromise Republicans and Democrats can support.

"I don't see any other way you can break the logjam," Howes said.

The governor's plan could force the Legislature's Democratic majority to work harder at reaching agreement, Howes said.

"Whether you like it or not he's saying: 'Look, you either come to the table and we agree, or I make all the decisions from now on,'" Howes said.

Democratic and Republican legislators are working on alternative revenue-raising plans that do not raise taxes, Howes said. One idea involves a variation of Pawlenty's plan to borrow funds and a nickel-per-drink "fee" on alcohol to pay for chemical abuse treatment. That would free up funding to be spent in other areas of the budget, Howes said.

Pawlenty's plan forces government to prioritize how it spends taxpayer dollars, Rep. Tim Kelly said. The Red Wing Republican said that is what his constituents tell them they want to see from the Legislature.

"The focus will be on getting services to people who most need it," Kelly said.

Cities and counties will complain about potential state aid reductions and threaten to cut police and fire services, Kelly said, "but they will prioritize when it comes down to it.

The Democrat-written bills Pawlenty is signing into law "weren't that bad," Kelly said, but the problem is how to fund them.

Kelly said Democrats in control of the Legislature were not taking Pawlenty seriously when he said throughout the legislative session that he will not support tax increases.

A budget agreement requires that everybody involved "gives a little bit," but the governor has not done so, Sen. Rod Skoe said.

Pawlenty is focused on using one-time funds to balance the budget, Skoe said, but an ongoing source of revenue, such as from a tax increase, is needed.

The Clearbrook DFLer and a lead senator on taxes said it is possible lawmakers could send another tax bill to the governor that helps close the budget gap.

Allowing the governor to unilaterally cut funding would be problematic, Skoe said.

"Boy, it'd be pretty tough on our cities and counties and health-care facilities if that's the route he takes," he said.

Rep. Al Juhnke, DFL-Willmar, said he interpreted Pawlenty's announcement as a step in the negotiations. But Juhnke said Pawlenty has been unwilling to compromise.

"It's his way of negotiating from outside the negotiating room," Juhnke said.

Juhnke said he believes Pawlenty will sign his agriculture and military veterans funding bill into law without cutting spending. The agriculture and military veterans finance package represents less than 1 percent of the overall state budget.

There is plenty of time left in the legislative session for DFL lawmakers to reach agreement with Pawlenty, Juhnke said.

"I've been here 13 years and I've yet to guess what the end game is," he said, "and these last two weeks are not for the faint of heart."

Freshman Rep. John Persell, DFL-Bemidji, said a majority of Minnesotans supports the DFL plan to erase a $4.6 billion budget shortfall and set a new state budget with a blend of spending cuts and tax increases.

"I think it's very arrogant for the governor to do what he did," Persell said.

Persell said that by a 2-to-1 margin, constituents who have contacted him support the DFL budget approach.

Rep. Lyle Koenen of Clara City and other Democratic legislators waited outside the governor's office to learn of the announcement.

"It sounds to me like he's not willing to negotiate," Koenen said.

However, Koenen said, there will be further attempts to work toward a budget agreement before the Monday deadline.

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