Local lawmakers back budget

Published 8:05 am Tuesday, May 18, 2010

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, a compromise that Austin area representatives supported.

“Certainly I don’t think it was perfect, but we’ve been there since February working hard,” said Sen. Dan Sparks, who voted for the bill to balance the budget.

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.

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“It did what we needed it to do to finish a balanced budget,” said. Rep. Jeanne Poppe, who also voted for the bill.

However, Poppe said budget deficits are not a thing of the past, and correcting them will be a key issue leading up to the fall elections.

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

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.

While $2 billion in payments was delayed to the schools, higher education funding was not cut.

“We dodged a bullet temporarily,” Poppe said.

While Poppe was pleased to avoid cuts to long-term nursing homes and to higher education, such groups may not be spared in the future. Large budget deficits of about $5 billion will likely continue to be a problem in the future, and lawmakers will need to take steps to correct the problem.

“When the pot of money is less and less, the fight for those dollars is greater and greater,” Poppe said.

Correcting the budget is going to be an ongoing discussion among lawmakers, and Poppe said leaders will need to look for ways to have a more structurally sound tax system. She said the tax system needs to be more transparent.

Sparks described Minnesota’s tax system as a roller coaster that rises and falls with the economy. The state was in a good place with revenue when the economy was strong, he said, but we’re now in uncharted water after the worst recession in decades.

“We have a real ongoing problem in the state of Minnesota,” Sparks said.

While Sparks said the state will need to look into new revenue sources in the future, he said cuts were needed to balance this budget.

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.

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.

Poppe said it was important to have future opportunities for Medicaid because it could assist regional hospitals.

Critics said the bill 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.

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.

Despite the difficult task of balancing the budget, Sparks said there are positives. There is money through the bonding bill for long term flood relief, and the recent jobs bill will help small business owners.

“I still think we have reasons to be hopeful,” Sparks said.