ST. PAUL, MN. -- Governor Tim Pawlenty made no secret of the fact he didn't like the federal stimulus package that President Obama signed into law last month, but on Tuesday he detailed how he'll use $2.6 billion of that money to shore up his proposed budget.
"Nonetheless it's now become the law," Gov. Pawlenty told reporters who gathered for a news conference in his office at the State Capitol, "It's our opportunity and our responsibility to implement it, particularly when we're paying the bill. For every dollar we send out to Washington we get 72 cents back."
The stimulus cash allowed Pawlenty to restore $304 million he originally planned to cut from the University of Minnesota and the MnSCU system in his budget plan, as part of his effort to solve the $4.6 billion projected deficit in the 2010-2011 budget cycle.
Uncle Sam's dough would also allow the governor to boost K-12 education funding in his plan by $424 million. Pawlenty has made it a goal to guard schools from cuts, and those who adopt his performance pay driven Q-Comp plan will gain the most protection against inflation.
"This situation is going to get better," Pawlenty said, "So using some one-time money, within reason, to get over this crevasse in the economy."
Pawlenty would also add $10 million back to the state courts system. Supreme Court Chief Justice Eric Magnuson has led a public campaign in the last two months to warn of major cuts to the judicial services, because the governor expects the courts to absorb the same five percent cuts being dealt to most state agencies.
The stimulus money will also be used to postpone cuts Pawlenty's seeking to make in the growth of state subsidized health care services. His original budget called for 84,000 adults to be cut from Minnesota Care, the health plan for working lower income families, and from the state's Medical Assistance program for the poorest Minnesotans.
DFL leaders react
Senate DFL leaders say that, while the stimulus money buys some time for those who would otherwise become uninsured, Pawlenty's plan sets the stage for a severe 35 percent cut in health coverage in 2011. That would represent 113,000 Minnesotans losing eligibility.
"This is a cruel hoax," Senate Majority Leader Larry Pogemiller asserted, "That's politics, to increase funding for K-12 while they just crush health care."
The Minneapolis Democrat remains focused on the longer range budget picture, beyond the next biennial budget but four years down the road. But Pogemiller this year is armed with a new law, signed by Pawlenty himself, mandating balanced books over the next four fiscal years.
Even before 2011, Pawlenty's budget envisions steering those on Medical Assistance away from emergency rooms by paying only for visits to clinics. Health and Human Services Commissioner Cal Ludeman say E.R.'s would be paid instead out of a $100 million "uncompensated care" fund.
"What happens when that runs out?" Assistant Majority Leader Tarryl Clark, a Saint Cloud Democrat asked, "Will we be closing hospitals in this state?"
She added, "Essentially the advice the governor's giving people in his health care plan is don't get sick, don't get old, don't lose your job if you want health care."
Pawlenty repeated his assertion that subsidized health care spending continues to rise unabated, and at some point will "suffocate" the state's other spending priorities.
Local Government Aid
Democrats are also unhappy to see that, even with the stimulus money, the governor plans cutbacks in state aid to cities and counties. Some "property poor" cities rely heavily on the money, especially for police and fire protection.
They'll be faced with raising local property taxes to compensate for lost aid. The Pawlenty adminstration predicts his budget plan, if enacted as currently drafted, would lead indirectly to $650 million in local property tax hikes over the next three years.
Senate Democrats say that number is actually closer to $850 million.
"It will mean less police protection, more crime in the neighborhoods and more property taxes," Pogemiller said.
Pawlenty said his cutbacks to LGA will be structured in such a way that all cities combined state aid and local revenue will drop by five percent. He acknowledged local mayors around Minnesota are lobbying him to reconsider.
"Well if you don't like five percent, do you like four? You like three? You like two?" Pawlenty remarked, "But don't tell us you can't do anything because that's not the times in which we live."
Senate DFL leaders last week proposed across-the-board spending cuts of 7 percent, including to schools. Their argument was that every sector of state spending needs to share in the pain of getting through the recession, and putting the state on solid footing over the next two two-year budget cycles.
Their plan also includes $2 billion in new revenue, most likely by raising income taxes on the wealthiest Minnesotans. The governor's new revenue source is nearly $1 billion from new revenue bonds repaid on future tobacco lawsuit settlement proceeds.
