Local governments, human services take brunt of budget cuts

Gov. Tim Pawlenty has released his plan to erase a $2.7 billion budget deficit, with local governments and state subsidized health care programs taking significant hits.

The Republican governor is using his emergency authority and a process known as unallotment to balance the books, after the legislative session ended last month without an overall budget deal.

Pawlenty's plan cuts state aid to cities, counties and townships by $300 million. Another $236 million would come from reductions in several human services programs, and $100 million from the state's colleges and universities.

Tax refunds for political contributions would be eliminated and a renters refund is reduced. State agencies will also have to trim operations by $33 million.

But the biggest piece of the budget solution, nearly $1.8 billion, would come from delaying state payments to school districts. Pawlenty says current economic conditions require everyone to live within their means.

"In rough terms, it's going to mean that the state of Minnesota's government is going to live on about 96 percent of the revenues that it's currently using or living on," said Pawlenty. "It's important that we do that because the alternative, advanced by my DFL friends across the aisle, was to dramatically raise taxes in Minnesota, including taxes on income, on businesses, on hard-working Minnesota families."

The budget cuts include:

-$200 million in local aid and credits to cities and townships;

-$100 million in local aid and credits to counties;

-$236 million in human services spending;

-$100 million in higher education appropriations;

-$33 million in most state agency operating budgets;

-$1.77 billion in K-12 education payment deferrals and adjustments.

Pawlenty says the cuts are less drastic than the ones he originally proposed in his budget plan last winter. He says the cuts are weighted toward the second year of the of the two-year budget cycle, to allow legislators to consider other budget options during the 2010 session.

Pawlenty and other governors have used unallotment in the past to resolve short-term budget deficits that show up late in the biennium. Some critics claim that Pawlenty is misusing his authority by unalloting at the start of the budget cycle.

There have also been suggestions that cities, schools or unions might challenge the cuts in court. Pawlenty says he's not worried about a potential lawsuit.

"The Minnesota Legislature and Gov. Stassen, in the 1930s, put this provision on the books. It's been used a number of times. It's been litigated a number of times," said Pawlenty. "We believe that we're on solid legal ground. I don't know if someone will sue or not. I don't think it will be successful."

The proposed cuts cannot take effect until the new two-year budget period begins July 1. And Pawlenty said his recommendations won't be finalized until legislators and stakeholders have time to weigh in.

DFL leaders were quick to criticize the plan. House Speaker Margaret Anderson Kelliher of Minneapolis issued a statement saying Pawlenty did more damage in an hour than in his entire career.

Kelliher says the public deserves to know how these cuts will impact jobs and local property taxes.

Assistant Senate Majority Leader Tarryl Clark of St. Cloud said Pawlenty was trying to minimize the impact of cuts that will cause real hardship, especially in cities.

"This is going to cost jobs around the state. It's going to be jobs lost in hospitals, in nursing homes, in our schools, in our colleges," said Clark. "Police and fire will be reduced. My guess is that in some communities, libraries and parks will be. Maybe next winter there will be some issues that relate to snow plowing."

Mayors and other city officials from around the state had been critical of the governor's proposal to cut local government aid, even before today's announcement. Mayor R.T. Rybak, a Democrat who is pondering a run for governor, said he disagrees with Pawlenty's choices.

"The governor has offered no plan for putting people to work, only for cutting jobs during a tough economy, and has offered no strategy for fixing a broken state budget that continues to lurch from deficit to deficit," said Rybak.

Rybak added that Minneapolis revised its 2009 budget assuming the state would cut its aid, so the city won't need to make any more budget cuts this year.

House Republican leader Marty Seifert, who is also running for governor, said today he supports Pawlenty's approach.

"Gov. Pawlenty today did what Minnesota Democrats cannot: He made government live within its means," said Seifert. "Democrats who condemn the governor's actions seem to forget they had more than five months to find a solution. Had they spent more time working with us on reforms and efficiencies, and less time in committees that produced no results, this day would have been avoided."

House and Senate leaders will get another chance to weigh in on the unallotment plan Thursday afternoon when a special panel meets, called the Legislative Advisory Commission, meets. The panel is set up to review the governor's emergency budget actions, but the panel does not have the authority to stop proposed cuts.

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