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Pawlenty announces first round of cuts
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"People need to realize this is an emergency and acting quickly to rein in spending is essential," Pawlenty said. Lt. Gov. Carol Molnau is at right. (MPR Photo/Tom Scheck)
Gov. Tim Pawlenty wants to use one-time money, and cut state agencies, programs and higher education to eliminate a projected $356 million projected deficit. Legislative leaders say they'll act quickly on Pawlenty's plan, although Democrats disagree with some of the details.

St. Paul, Minn. — Gov. Pawlenty says his plan is the first step toward climbing the "Mount Everest of budget deficits." Pawlenty's plan would close the gap in the two-year budget that ends in June. It would also leave the state with a small financial cushion in case the economy worsens, and put a dent in the projected $4.2 billion deficit for the next two-year budget cycle.

"This is really modest compared to the bigger challenge that is coming in '04-'05. I think I would describe these changes as tough, but thoughtful and fair," he said.

Pawlenty repeated his pledge to balance the budget without raising taxes. He says Minnesota state government must learn to live within its means. His plan relies heavily on one-time money, including using $130 million set aside for transportation projects.

Pawlenty plans to borrow for those projects instead. He also wants to tap several funds, including the 21st Century Minerals Fund, designed to create jobs on the Iron Range.

"You know, we need to put the fund to work in meaningful ways or we need to use the money, but we can't afford to have $60 million parked away in a wish-list fund in these times of budget crisis," Pawlenty said.

Pawlenty would also cut money for state agency operating budgets, a move that will likely result in layoffs of state employees. Another $77 million would be taken from grants and programs, ranging from ethanol subsidies to folk arts grants. He would sell the state jet and eliminate the state band, both of which he described as symbolic cuts that don't save large amounts of money.

Pawlenty's plan would also cut $50 million from higher education, half from the University of Minnesota and half from the MnSCU system. He wants to largely restrict out-of-state travel for state employees, and is asking the Legislature to eliminate a law that prohibits the state from privatizing state functions.

"Minnesotans need to know we got a law on the books that prevents Minnesota government from saving money. It's a stupid law, and it needs to be changed," he said.

Pawlenty says he will give the Legislature a reasonable amount of time to act on his plan. But he says if lawmakers stall, he will invoke his power to make spending cuts on his own.

Lawmakers say they plan to work quickly. House Republican leaders say they should have Pawlenty's plan on the floor for a vote next week. House Speaker Steve Sviggum of Kenyon says the proposal will probably get tweaked, but he thinks it's a fair plan.

"I just want to compliment Gov. Pawlenty. I think his priorities generally are right and they're balanced pain, he's sharing the pain," Sviggum said.

Democrats say they'll work with Republicans to balance the budget, but some have questioned specific cuts.

"At first glance, there seems to be a little bit of an imbalance relative to rural Minnesota," said Sen. Dick Cohen, DFL-St. Paul, who chairs the Senate Finance Committee. "There are a couple of significant eliminations of grants that go to the rural parts of the state, parts of the state that have been hard hit. And I'm speaking in particular of the ethanol grants and the 21st Century Fund."

Finance Commissioner Dan McElroy says the Pawlenty administration won't balance the budget on the backs of the poor and vulnerable, and "ethanol producers don't fit in that category in general."

Hearings will begin this week on the Pawlenty administration's plan. At the same time, McElroy's office is putting together a budget for the next biennium.

Pawlenty says eliminating a deficit of more than $4 billion will be far more difficult than this initial challenge.

"I cannot overstate how difficult this is going to be. I mean, I have said many times and I repeat again today: we are in a crisis. The state of Minnesota is in a financial crisis. And the state of the state's finances are not good. In fact, they are bad," he said.

Pawlenty and McElroy don't have much time to put together a plan for the larger deficit. It's due before the Legislature by Feb. 18.

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