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Gov. Ventura delivered the final State of the State address of his term Thursday night, and he used the speech to provide Minnesotans with his perspective on the state's budget problems. The state faces a nearly $2 billion projected budget shortfall. The governor says if the Legislature doesn't act quickly to solve the problem, he'll use his authority to cut government spending.

	Gov. Ventura delivers his State of the State address from the governor's mansion. Read the text | Listen to Ventura's address. (AP Photo/Jim Mone)

Ventura chose an unusual setting for his somber State of the State message. Instead of the House chambers or another public venue, he delivered his "budget 101" lesson alone from the drawing room of the governor's mansion. Wearing a turtleneck and sportscoat, Ventura used pie-charts and graphs of dollar bills to illustrate the state's budget woes. He says Minnesota is one of 44 states facing budget deficits due to the national recession and the economic impact of Sept. 11.

"Over two years, Minnesota will collect almost $2 billion less in taxes and fees than we thought. And just as important, in all the years after that, revenues will be about $1.2 billion less than we have committed to spend," he said.

Ventura says the state has three ways to fix the problem: cut spending, raise taxes or use budget gimmicks. He says the third option is not responsible, and therefore off the table. The governor says he'll start with spending cuts, and says no area of the state budget is off limits.

"In this process, there should be no sacred cows," he said.

Ventura alluded to potential targets, noting K-12 and higher education make up more than half of the state budget. Health care, he said, is the fastest growing spending item. The governor also highlighted the $2.8 billion dollars in state aid to cities and counties. Ventura made it clear he favors spending cuts over tax increases, but he didn't rule out raising taxes. He says some have suggested raising the state's tax on gas or cigarettes.

"Extending the sales tax to clothing could be talked about. Or revisiting my proposal to lower the sales tax rate but extend it to some services," Ventura said.

	DFL Senate Assistant Majority Leader John Hottinger of Mankato says the State of the State lacked vision. Hottinger and other Democrats agree with the governor that everything should be on the table. (MPR Photo/Laura McCallum)

Ventura didn't propose any specific cuts or tax increases. He says he'll release his detailed plan for solving the problem next week. He challenged the Legislature to act on his plan in the first week of the session that begins on Jan. 29. The governor says if the Legislature doesn't take action, he will.

"At the appropriate time, I will begin to use my executive powers to begin cutting our expenses and avoid a budget deficit made worse by inaction."

Legislative leaders say they're willing to work with the governor, but they say expecting action in the first week of the session is unrealistic. Reaction to Ventura's speech was mixed.

Republicans applauded his emphasis on spending cuts, but criticized him for leaving the door open to tax increases. Democrats saw less to like in the speech. Many were hoping for more details. DFL Senate Assistant Majority Leader John Hottinger of Mankato says the State of the State lacked vision.

"Someone told me that we cancelled Wheel of Fortune to hear the governor talk about the Wheel of Misfortune for the state of Minnesota. I suspect there are many who would have preferred to see Wheel of Fortune," Hottinger said.

	Republican House Speaker Steve Sviggum of Kenyon, right, says the budget can be balance d by dipping into the state's reserves and cutting spending (Listen to his comments). Republicans have heir own suggestions for where to cut. The list doesn't come anywhere close to $1.2 billion in permanent cuts, but Majority Leader Tim Pawlenty of Eagan, left, says House Republicans will release more ideas next week. (MPR Photo/Laura McCallum)

Hottinger and other Democrats agree with the governor that everything should be on the table. Senate Majority Leader Roger Moe of Erskine says that should include revisiting last year's tax bill, which overhauled the property tax system and rebated nearly $800 million to taxpayers.

"We passed a property tax reform bill whereby non-residents of Minnesota get a tax cut at the expense of Minnesota residents. I would hope now that we wouldn't go back and raise taxes on some of the essentials that Minnesotans need like clothing and food and medical expenses, seems to me that that would not be very good tax policy," Moe said.

Ventura says he will "adamantly oppose any undoing of the major tax reforms" passed last year. Republicans agree, and they say they'll oppose any tax increases.

Republican House Speaker Steve Sviggum of Kenyon says the budget can be balanced by dipping into the state's reserves and cutting spending.

"Raising taxes is not an option, whether it be on services, on clothing, or on the 'sin taxes' of cigarettes; we are not going to raise taxes," Sviggum said.

Sviggum went further than the governor, laying out a short list of 11 areas to cut in the state budget. They include the state planning department - headed by Ventura advisor Dean Barkley - the Board of Government Innovation and Cooperation, and the state's highway helper program. The list doesn't come anywhere close to $1.2 billion in permanent cuts, but Majority Leader Tim Pawlenty of Eagan says House Republicans will release more ideas next week.

"We're going to be throwing some things out on the table, this is just the start, it's not meant to be $1.2 billion worth, we think it's a few hundred million, it's a pretty good start, it's more than we got out of the governor tonight," Pawlenty said.

Republicans also criticized the governor for not immediately enacting a state hiring freeze, which they suggested last month. Senate Minority Leader Dick Day of Owatonna says it's the obvious first choice.

"What are major companies in the state of Minnesota doing today when they find that their revenues are down? The first thing they do is they cut employees, which is the problem that we have in the state, and that's what we should be looking at, through attrition, through retirements," Day said.

Day says the state's payroll has nearly doubled in the last decade, from 34,000 people when he joined the Senate in 1990, to 53,000 employees today. While Republicans are quick to offer suggestions for spending cuts, they want to take education and nursing homes off the table. Senate Democrats haven't gone that far, but say education would be near the bottom of the list of areas to cut.

DFL House Minority Leader Tom Pugh of South St. Paul says he thinks Ventura was trying to prepare Minnesotans for education cuts in his speech.

"I'm just a little bit afraid that he's setting the public up for invading our school budgets to try to solve this problem. I know for sure I'd certainly fight with every fiber that I have to make sure that our schools don't suffer any more than they are today," Pugh said.

A couple of interest groups also moved quickly to criticize the governor's speech. Cities and counties are worried about cuts in their funding, and the conservative Taxpayer's League attacked Ventura for raising the possibility of tax increases. The cries from affected parties are likely to grow next week, when the governor follows up his State of the State with a detailed plan that's seems certain to include specific cuts.

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