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Lawmakers fret as Pawlenty orders spending freeze
The Pawlenty administration asked all state agencies on Thursday to freeze all spending that isn't obligated by a state contract. Pawlenty and lawmakers face a projected $4.5 billion budget shortfall over the next two and a half years. About $356 million of that deficit needs to be addressed as soon as possible because it's part of the current two-year budget cycle which ends in June. Administration officials say Pawlenty ordered the spending freeze to keep all of his options open. But several lawmakers say they're concerned that key funding will be cut off.

St. Paul, Minn. — The state budget director sent a notice to the heads of all state entities asking them to not "incur any new obligations with state funds." The administration has expressed concern in recent weeks that it has little money to work with to fix the deficit in the current budget, especially since $544 million in local government aid was sent out in late December.

Pawlenty spokesman Dan Wolter says Pawlenty wanted to send a signal to state agencies to be conservative with their spending.

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"Ever since his first meetings with state budget officials, he's repeatedly expressed frustration at the rate of spending. It kind of appears that toward the end here that spending is increasing. There's a rush to get money out the door. He wanted to send a loud and clear message to agencies that we need to keep our options open," according to Wolter.

Wolter says Pawlenty will announce his plan for dealing with the current budget deficit early next week. While lawmakers acknowledge that the administration has few options, they expressed concern that the freeze could impact the public.

Rep. Rich Stanek, R-Maple Grove, says he was surprised when public safety officials told him about the funding freeze. Stanek was a key author in last year's anti-terrorism legislation. He says he's concerned that $13 million in funding for anti-terrorism equipment and training could be in jeopardy. He says he'll urge Pawlenty to spare the funding.

"If, in fact, this was some kind of broadcast fax that went out saying, 'Hey, don't release any money that's not contractually obligated or encumbered to date,' then there may be a reasonable explanation for it. We will have some discussions particularly about this $13 million. It's what police and fire statewide were fearing and that is once we get back into legislation session that the money wouldn't be released," Stanek said.

Several DFL senators say they're concerned that the state's $9 million in dislocated worker funds is now off limits to laid-off workers.

Sen. Tom Sauxhaug, DFL-Grand Rapids, says the announcement couldn't come at a worse time for his region.

Blandin Paper laid off 300 people in Grand Rapids this week and several groups worry that the National Steel Pellet Company mine and taconite plant in Keewatin is about to close. Sauxhaug says dislocated worker funds could help those who lost their jobs in recent weeks.

"We know that unemployment is not frozen. We don't think these should be frozen. It's been successful and I think the timing has been particularly bad given these closings. We hope the governor is going to reconsider," Sauxhaug said.

Pawlenty said at a news conference earlier in the day that he would do what he can to help the laid-off workers at Blandin Paper. He says a state team is headed to the region to get employees signed up for unemployment compensation. He also says he's trying to find time to visit the area next week.

Republican House Speaker Steve Sviggum says he supports Pawlenty's action. He says the state has limited options since the current budget is scheduled to end in five months.

"I think the governor has taken appropriate action. I was not aware of it, but it seems to me that we have to come up with $356 million and we have to do it very very quickly. And the best way to do it very quickly is to stop any spending point blank," Sviggum said.

Sviggum says the House will work to get Pawlenty's budget balancing plan to the floor within a couple of weeks.

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