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State Finance Commissioner Pam Wheelock told Minnesota nonprofit organizations Wednesday that they aren't being singled out for budget cuts.

	Commissioner of Finance Pam Wheelock talks to more than 300 representatives of nonprofit agencies Wednesday at the Capitol. (MPR Photo/Laura McCallum)

More than 300 nonprofit representatives crammed into a Capitol hearing room to hear Wheelock defend her decision. Right before Thanksgiving, she ordered state agencies not to enter into any new grant agreements. Wheelock says she knew the budget picture wasn't pretty, and wanted to give policymakers the flexibility to make cuts.

"People will say the best advice is just to stop, take a deep breath, take stock of where you are, and then proceed to make some planned and orderly decisions," she said.

Wheelock also asked state agencies to come up with ways to cut their budgets by up to 10 percent. She says the freeze will be in place at least until agencies come up with budget plans shortly before Christmas.

But many nonprofits say even a one-month delay in funding they're counting on could mean cuts in services. Some say they've already started to cut back.

The executive director of Common Health Clinic in Stillwater, Cherilee Sherry, says about half of her budget relies on state grants that are on hold. She says the clinic mostly serves women who don't have health insurance, and provides family planning, prenatal care and other services.

"I have my staff coming to me, and saying, 'Do I have a job or not?' Because it's a January 1 start up. We're a small organization, I do not have the reserves. I rely on United Way funding and I rely on state funding and then patient fees - if the patients pay," Sherry said.

Nonprofit organizations say they're not naive enough to think they should be completely immune from the state's belt-tightening. But they say a blanket freeze on new grants is arbitrary and inappropriate.

	Senate Majority Leader Roger Moe, right, and Senate Minority Leader Dick Day, left, identified an increase in the gas tax as a possible solution to the state's financial problems. Read more.

Wheelock says the action doesn't mean nonprofits are at the top of the hit list. She says the freeze affects all new grants, not just those going to nonprofits.

"Many of the programs that you operate are serving exactly the populations that are hit the soonest and the hardest by a recession, and we know that. I'm not going to speak for everyone that's going to be involved. And I'm also not going to say that you're not going to be affected by this as part of our recommendations about how to move forward, because there are no easy solutions to what is really an ongoing problem," Wheelock said.

Wheelock also had no easy answers for nonprofits. Many groups aren't sure which grants are affected, and want to know how long the freeze will last.

Michael Dahl, executive director of the Minnesota Coalition for the Homeless, says homeless shelters were already turning people away before the grant decision.

"And to be told that the money that we had promised you back in June is no longer available is the wrong message to be sending them, and they're not going to be able to provide services to people who definitely need the help," Dahl said.

Several DFL lawmakers told the groups they're upset about the Ventura administration decision. They say it does appear that nonprofit organizations are being singled out for budget cuts.

Nonprofit representatives who came to the Capitol looking for answers say they left disappointed.