Minn. legislature approves budget compromise to erase $3 billion state deficit, adjourns

Minn. lawmakers pass budget compromise, adjourn

ST. PAUL, Minn. — Minnesota lawmakers wrapped up their work for the year on Monday by sending Gov. Tim Pawlenty a bill that resolves a $3 billion budget deficit.

The session spilled briefly into overtime before the Legislature passed a package that essentially mirrors the budget cuts Pawlenty made on his own last year, only to have them overturned by the courts.

Lawmakers signed off on delaying nearly $2 billion in state aid payments to school districts. A key provision for Democrats, who control both chambers, would allow Pawlenty’s successor to extend Medicaid health coverage to more poor Minnesota residents using federal money. Pawlenty, a Republican, isn’t seeking re-election.

“We led in difficult times and we got the job done, warts and all,” said House Majority Leader Tony Sertich, DFL-Chisholm. “No one agreed on every solution in here but that is the definition of compromise.”

Critics said the compromise failed to address perpetual imbalances that have created large deficits at the start of every recent two-year budget, and would result in an even larger shortfall for the next Legislature to tackle.

“It’s really easy to kick the can down the road like this,” said Rep. Jim Abeler, R-Anoka, who voted against the final compromise.

The session-ending agreement came late Sunday as lawmakers were up against a deadline set in the state constitution for the end of the regular session. They didn’t have enough time to review the bill before voting, so Pawlenty called them into an immediate special session with plans to vote by daybreak, a deadline they also overshot.

The deal came after the Republican governor and Democrats who run the Legislature spent days at an impasse over the Medicaid plan. Without a balanced budget, the state would have faced a cash crunch in the coming months after a ruling earlier this month went against Pawlenty’s 2009 spending reductions and deferrals because of the way he made them.

The Minnesota Supreme Court decision focused on one small program Pawlenty cut, but had the potential to unravel the state’s budget if other groups who lost funding went to court on the same grounds. The balanced budget agreement reduces that risk.

Democrats claimed credit for balancing the budget while protecting nursing homes, public schools and hospitals. The bill beefs up an account for hospitals that serve patients in the program formerly known as General Assistance Medical Care.

But not even they were happy with it.

“This is the best of a bad situation,” said Sen. Richard Cohen, DFL-St. Paul.

Before adjourning for good late Monday morning, the House passed the final budget compromise 97-32, and the Senate 52-14.

Pawlenty said the budget deal — his last with lawmakers before he leaves office in January after two terms — protects taxpayers and helps employers create jobs.

“We were able to resolve a $3 billion budget deficit without raising taxes. That’s really important,” Pawlenty said late Sunday.

Under the 247-page bill, the Republican governor technically could sign the state up for the extended Medicaid program offered through the federal health care overhaul. But Pawlenty said Sunday he’s “not a fan.” He is a potential 2012 presidential candidate who has sharply criticized the federal health care law.

House Speaker Margaret Anderson Kelliher, the endorsed Democratic candidate for governor, said if she wins in November one of her first acts would be to sign the state up for the Medicaid program. She said joining the program would help Minnesota recover a larger share of the tax dollars it currently contributes to Medicaid, create more healthcare jobs and cover more uninsured Minnesota residents.

The budget deal requires the state to catch up school districts on delayed aid payments, but it’s unclear whether the promise would be kept. One Legislature cannot bind the next, and a new batch of lawmakers convenes in January to set the next two-year budget.

In its final minutes of the special session, House Republicans were able to block passage of an education bill that included new diploma options for at-risk students and revised some state testing rules. The bill lacked the changes Pawlenty had sought on teacher tenure and licensing, which he said was necessary for a successful application for grant dollars in the federal government’s Race to the Top program.

Despite bipartisan support for the bill in the Senate, House Republicans complained it wasn’t part of the final agreement between Pawlenty and lawmakers and should not have been considered at the last minute.

Associated Press writers Brian Bakst and Patrick Condon contributed to this report.