Pawlenty to Legislature: Cut $536 million or I will

With less than two weeks remaining in the legislative session, Gov. Tim Pawlenty offered up a new round of potentially painful and politically unpopular budget cuts Tuesday as a hoped-for $408 million federal windfall has failed to materialize so far.

Pawlenty announced the cuts amid a flurry of tough talk that shot like a lightning bolt through the heart of what has been an otherwise sleepy budget battle. The governor bashed DFL lawmakers for cutting only a fraction of the money necessary to balance the budget and frittering away the session on less consequential legislation.

"It's ridiculous; in fact, it's pathetic," Pawlenty said at a news conference. "If they won't do it, I'll do it for them," he said, hinting at a possible use of his emergency budget-cutting power, known as unallotment. He used unallotment last summer to unilaterally balance the budget, an action that has been challenged in court.

DFLers accused Pawlenty, a Republican, of being disengaged as he tests a possible run for president and for throwing "a tantrum" when he didn't get his way on earlier budget-cutting recommendations.

"Bring it down a notch," said Senate Majority Leader Larry Pogemiller, DFL-Minneapolis. "Just bring it down a notch."

Pawlenty and some legislators had penciled in $408 million in likely federal funding to help plug a nearly $1 billion hole in the state budget through next summer.

Without the federal windfall, lawmakers must slice about $536 million from the budget before they adjourn May 17. Pawlenty proposed resurrecting $405 million in cuts that lawmakers have so far rejected, largely in the form of reductions in aid to local governments and human services. To make up the remaining $131 million, Pawlenty proposed deeper cuts to those areas and reductions in aid for the Iron Range. He spared military, veterans and K-12 schools.

One of Pawlenty's deepest cuts would be in aid to local governments, a perennial target of his administration. Critics say that choice merely pushes the problem onto residents in the form of higher property taxes.

"The proposed [aid] cut may be the worst blow ever dealt to rural Minnesota," said Glen Fladeboe, spokesman for the Coalition of Greater Minnesota Cities. "If enacted, it will break communities apart."

Pawlenty's proposed cuts could put legislators in an awkward position as many are running for re-election or higher office.

DFL leaders have previously lambasted Pawlenty, who prides himself on being a shrewd budgeter steadfast in his refusal to raise taxes, for not coming up with a budget-balancing plan that doesn't rely on federal money. Now Democratic lawmakers must accept his proposed cuts or find the money elsewhere -- and avoid the political land mines such as cuts to education or deeper cuts to social services. If Pawlenty rejects lawmakers' solutions, it could set the stage for a showdown in the closing hours of the session, which must end by May 17. DFL leaders said they have no plans to offer legislation to raise taxes.

Pawlenty's administration urged lawmakers not to adjourn with a placeholder in the budget for the federal money.

"Good budgeting states, 'don't finish session hoping that federal money will come,'" warned Tom Hanson, commissioner of Minnesota Management and Budget.

DFLers blasted the governor for what they call his stubborn refusal to offer new solutions after a bipartisan group of lawmakers rejected many of his proposed cuts.

Pawlenty is "forcing old ideas down the throats of Minnesotans," said House Majority Leader Tony Sertich, DFL-Chisholm.

Hopeful fed money will come

State officials remain optimistic that the $408 million will eventually show up but said it might not come until later this year.

It's not clear what would happen if or when the money comes in.

One option is to put a trigger date for the new cuts, like July 1, the beginning of the new fiscal year. If the federal money comes in before then, the cuts would be withdrawn.

But that might not be the most fiscally prudent option as the state faces a potential multibillion-dollar shortfall in coming years. Another option would be to use the one-time cash infusion as a cushion during what are expected to be a lean few years.

Hanson said the proposed cuts are not a signal the state is posturing to reject the money, which would come as part of a temporary boost in federal Medicaid payments under the American Recovery and Reinvestment Act.

Pawlenty has been a vocal critic of how the so-called federal stimulus money was spent. "We'll still take it," Hanson said.

These are not the only budget problems facing Pawlenty and lawmakers. The Minnesota Supreme Court could rule any day on the legal challenge to $2.7 billion in emergency cuts and payments shifts Pawlenty imposed through unallotment last summer to deal with the same budget crises.

If the court rules against Pawlenty, a massive new deficit could fall into lawmakers' laps as the sessions closes.

Baird Helgeson • 651-222-1288