Pawlenty orders Minn. cash crunch plans, may defer bill payments if state budget not solved

Pawlenty orders planning for Minn. cash crunch

ST. PAUL, Minn. — Gov. Tim Pawlenty ordered state agencies Friday to take an inventory of programs and identify discretionary payments that can be put off in case of a cash crunch after a court ruling threw budget negotiations into turmoil.

Pawlenty eased off talk of a partial government shutdown after an emergency meeting of executive branch leaders. The Republican governor said his administration is merely planning for what he had described earlier as “an imminent and severe cash flow crisis.”

The description was included in an executive order that instructed cabinet members to assess core functions pertaining to “life, health and safety of Minnesota citizens.” He didn’t give a deadline for the spending inventory but said he told commissioners to make it a priority.

Meanwhile, the Democratic-led Minnesota House soundly rejected Pawlenty’s 2009 budget cuts, offered as an amendment to another spending bill as top Democrats tried to force the issue.

The scrambling follows a state Supreme Court ruling that Pawlenty overstepped his authority in making budget cuts on his own last summer after negotiations with the Legislature reached an impasse. That ruling directly affected only a sliver of his $2.7 billion cuts, but state leaders worry that other groups may sue to overturn their cuts as well.

That hasn’t happened in the two days since the ruling. School leaders and city government heads have said they don’t intend to sue to restore aid cuts. But Pawlenty said it was necessary to plan for the worst.

“This could come on fairly suddenly,” he said Friday.

Pawlenty’s top budget official, Tom Hanson, said the administration is constrained by a state law that requires bills be paid within 30 days. There are some sales tax rebates and grant awards that may not be covered, officials said.

The governor is holding out hope that lawmakers will ratify last year’s cuts made through a power known as unallotment, which included $1.8 billion in delayed school aid checks.

But Democratic leaders gave little indication that they would simply sign off on last year’s cuts. Senate Majority Leader Larry Pogemiller, a Minneapolis Democrat, called the situation the result of “several years of inattentiveness” by Pawlenty, who has long resisted tax increases and last year vetoed a Democratic plan that would have included one.

“The court decision is not the issue related to the cash flow problem,” Pogemiller said. “If the court had decided the other way, we’d still have this cash flow problem that the governor is now highlighting.”

Top lawmakers were in and out of Pawlenty’s for private budget talks on Friday evening.

The 2009 cuts went down 105-27 in the House. GOP Rep. Tom Emmer, his party’s candidate for governor, was absent and didn’t vote, while House Speaker Margaret Anderson Kelliher, one of three Democrats running for the state’s top position, voted no.

House Majority Leader Tony Sertich said the vote was necessary to show whether Pawlenty’s approach had legislative support.

“If it fails, we’re going back to the table. We’re compromising. We’re going to get this done,” he said.

Republicans challenged Democrats to put forward their own budget plan. Before the vote, Kelliher said a more detailed proposal is coming next week, with major elements including the delayed school payments, spending cuts Democrats can live with and unspecified new tax dollars.

Pawlenty and Republican leaders say they won’t agree to tax increases to close the gap. Sen. Dave Senjem, the top Republican in that chamber, said at least half of his 21-member caucus was willing to back Pawlenty’s plan, passage of which require votes from many more Democrats.

“The question is how do we pay for things when we don’t have money,” Hanson said. “Managing money is about managing risk and having contingency plans in place.”

Democratic Rep. Ryan Winkler, an attorney, said the unallotment ruling means that Pawlenty can’t decide to pay one bill but not another until he and lawmakers enact a balanced budget.

“He has no authority to start deciding what things to fund and what things not to fund. That is the very point of the unallotment case. And the reason he doesn’t is because he has not agreed to a balanced budget,” said Winkler, a Democrat from Golden Valley.

Pogemiller said the Senate is willing to endorse some form of the school aid shift that Pawlenty used to solve big chunk of the problem. But he also said some kind of tax or revenue increase needs to be part of the solution, though he wouldn’t say what kind.

The state constitution requires the legislative session to end by May 17, but Pawlenty has the power to call lawmakers into unlimited special session. Pawlenty hasn’t ruled that out.

The governor canceled a two-day political trip to South Carolina that was set to begin Friday.

Associated Press Writer Martiga Lohn contributed to this report.