Minnesota Senate working on bill to shut $2.9B budget gap through cuts, possible tax increase

Minn. Senate readies bill to shut $2.9B budget gap

ST. PAUL, Minn. — A bill steaming toward a vote in the Minnesota Senate would close most of the state’s $2.9 billion budget gap with spending cuts, payment delays and possibly a tax hike.

Parts of the plan to address the deficit in Minnesota’s current budget were released Saturday in a meeting of the Senate Finance Committee. Other pieces were still being crafted and will be made public by the time the full Senate votes Monday.

If approved, the plan would head to the House, which could forward it to Republican Gov. Tim Pawlenty or send it to a conference committee which could make more changes. Both chambers are controlled by Democrats.

The bill affects most things the state pays for, from aid to public colleges to allowances that help offset costs for city services.

“If you’re a college kid paying tuition, certainly it puts that much more pressure on tuition,” said Sen. Dick Cohen, a St. Paul Democrat and the committee’s chairman. “If you’re concerned about property taxes and what you’re paying in property taxes, the cuts to local governments increase property taxes.”

Most of the budget hole would be closed by deferring payments to schools in a way similar to delays Pawlenty ordered last year. His school payment deferrals and other cuts temporarily balanced the budget, but the state Supreme Court said this week his actions were illegal because he made them without legislative consent.

The court decision has added new urgency to the budget deliberations. If schools, cities or other groups touched by cuts Pawlenty made last year petition a court for immediate reinstatement of their aid, the state would run out of cash, his administration has said.

Pawlenty has pressed the Legislature to ratify his previous cuts and payment deferrals to head off an unprecedented fiscal crisis.

The bill now being considered would include many cuts similar to those Pawlenty ordered, along with additional spending reductions and payment delays. Cohen couldn’t say Saturday how closely they line up, noting that the bill is taking shape on the fly.

“I don’t think we have a choice at this point but to pass on a lot of the governor’s cuts,” Cohen said. “He’s put us in a box coupled with the Supreme Court decision.”

Republican legislators criticized the bill’s reliance on $433 million in unspecified new revenue.

“We now have the equivalent of a legislative confession that the Democrats are ready to raise taxes,” said Sen. Geoff Michel, R-Edina. They’re just not saying which tax.”

Those details won’t be known until later. Senate Taxes Committee chairman Tom Bakk of Cook, who is working on that portion of the bill, said it will be a struggle to find something Pawlenty will support.

Pawlenty has said he won’t sign tax increases of any kind, and Republican leaders insist their members won’t break ranks to help Democrats override a veto.

All year long, Pawlenty and lawmakers were hoping to land $400 million in federal Medicaid money to put toward the state budget problem. But that money is hung up and no one expects it to come through before the May 17 adjournment deadline facing the Minnesota Legislature.