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Budget chief eyes arts for state cuts
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Finance commissioner-designee Dan McElroy told the Twin West Chamber of Commerce on Friday that spending cuts have to be fair. (MPR Photo/Laura McCallum)
Gov.-elect Tim Pawlenty's finance commissioner says state government will have to stop doing some things it's done in the past. Dan McElroy told the TwinWest Chamber of Commerce on Friday that Pawlenty will not balance the budget on the backs of poor people. But McElroy says programs ranging from the arts to local government aid are on the table for cuts. Legislators say they think there are ways to trim government spending, and some are also willing to increase the gas tax to raise revenue for the state.

St. Paul, Minn. — With the state facing a $4.6 billion deficit, it won't be business as usual, according to incoming Finance Commissioner Dan McElroy. He's in the midst of putting together Pawlenty's budget for the next two years. McElroy told business leaders and legislators from the western suburbs that state government can't do everything.

He says all programs will be considered for potential cuts, and the only thing off the table is a tax increase. McElroy says spending cuts should be fair, and not limited to programs that benefit low-income Minnesotans. "So some programs that are important to wealthy people also have to be looked at," he said. "And those are sensitive, you know, the Minnesota Council for the Arts and the humanities and the Historical Society and what some people refer to as amenity spending, perhaps even programs that are important to politicians will come under the microscope."

The Minnesota State Arts board is set to receive about $26 million in the current two-year budget cycle. The Humanities Commission will get around $2 million, while nearly $54 million has been appropriated to the Historical Society.

McElroy says some Democrats have said if Pawlenty's budget relies on spending cuts, Minnesota will become a "cold Mississippi". McElroy disputes that, and says he'd rather compare Minnesota to Wisconsin, a state with a similar population that spends about $4 billion less each biennium.

"I would argue that if we take a large percentage of this budget deficit out of spending - and we have some other options in one-time money or shifts, but we can't overdo that - but if it all came out of spending, I think the worst case is that we become a cold Wisconsin," McElroy said.

Wisconsin's deficit is about $2.6 billion, and the state's Democratic governor has reached an agreement with Republican lawmakers not to raise taxes. Minnesota DFL leaders won't make a similar commitment, and say they want to make sure Pawlenty's budget doesn't give special advantage to people with affluence and influence. Republican legislators say they'll work with Pawlenty to help him cut government spending.

House Tax chairman Ron Abrams of Minnetonka says the state should finally eliminate the state Planning Agency, which costs about $14 million to run over two years. "You pick up $20 million here and $50 million there, and all of a sudden, you may have half a billion dollars a year of some small ideas, and that can make a big difference," he said.

Other suggestions include cutting the state Highway Helper Program, at a million dollars a year, and using technology to reduce costs.

Newly-elected Sen. David Gaither, R-Plymouth, has been talking to state employees, as he helps Pawlenty hire a new commissioner of administration. Gaither, who owns a recruiting business, says there are ways to use technology to make state government more efficient.

"Whether it's renegotiating contracts with our suppliers such as Microsoft and Oracle, or going back to a different form of technology for long-distance calls, I mean, some subtle, but yet millions of dollars savings that in the aggregate could have an impact," Gaither said.

Gaither says he agrees with Pawlenty's commitment to hold the line on taxes. Gaither says he wants to focus at state spending first, and would only consider a tax increase if spending cuts alone can't solve the problem.

Other Republicans say they'd support a gas tax increase to make sure transportation gets more money. Rep. Barb Sykora, R-Excelsior, says many suburban legislators would back a bump in the gas tax, if the formula is changed to make sure more of the money goes to suburban roads.

"Let's face it - the metropolitan people are paying the majority of the tax on gasoline, but the majority of the money is going elsewhere," Sykora said. "And Hennepin is a great example. We pay the highest amount, I believe, of gas tax, get the lowest amount back."

Pawlenty opposes a gas tax increase. Some Republicans, including House Speaker Steve Sviggum, say they consider the gas tax a user fee since it's dedicated to roads, and hope to persuade Pawlenty that a hike in the gas tax doesn't violate his no-tax-increase pledge.

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