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Rural vs. Metro split on display in budget-cutting dispute
Gov. Tim Pawlenty's short-term budget fix is moving quickly through the Legislature, but not without some adjustments. House Republicans oppose Pawlenty's proposed ethanol cuts, while Senate Democrats want to restore several proposed cuts, including ethanol and an Iron Range fund. Pawlenty says he worries some lawmakers may not grasp the magnitude of the deficit Minnesota is facing.

St. Paul, Minn. — Although House Republicans are thrilled to have one of their former members in the governor's office, they don't plan to go lockstep with his first budget proposal. They don't like his plan to eliminate ethanol subsidies for the rest of the fiscal year, saving $27 million.

Rep. Greg Davids, R-Preston, who represents the home district of ethanol producer Pro-Corn, says ethanol supporters were shocked to see the funding wiped out.

"Some people said, 'well, it's a point to negotiate from.' I said, 'no.' I said going from a 15 percent cut to a 10 percent cut is a point to negotiate from. A 100-percent cut -- that brings rallies to the Capitol," he said.

Davids says the issue of ethanol subsidies divides rural and urban lawmakers, and cuts across party lines.

"Rural members, as a whole, support it. I've supported ethanol for many, many years and will continue to. There's other people that have other interests, whether it be in the suburbs or the cities, that aren't quite so supportive," he said.

Some Republican lawmakers suggested that Pawlenty may have gotten too much advice from suburban advisors when he proposed the ethanol cuts. Most members of Pawlenty's cabinet, including his top budget aide, Finance Commissioner Dan McElroy, are from the suburbs.

Pawlenty's chief of staff, Charlie Weaver, a former legislator from Anoka, says the governor gets plenty of advice from rural cabinet members.

"The lieutenant governor was involved in the discussions and putting together the budget, who is of course from rural Minnesota. (The) commissioner of agriculture, Gene Hugeson, from rural Minnesota, was very involved in the ethanol debate specifically, so we consult with those folks who are involved in particular areas, in this case the ag - rural Minnesota had a strong voice," according to Weaver.

House Republicans, led by Speaker Steve Sviggum, a farmer from Kenyon, will probably restore about half of the ethanol cuts. The Senate budget plan would restore all but $2 million of Pawlenty's proposed ethanol cuts.

Gov. Pawlenty says he's told lawmakers if they don't cut ethanol subsidies, they better find other places to cut in the budget. Pawlenty says money for the ethanol industry is a lower priority than funding for needy children and nursing homes.

"We knew this was going to be very difficult, very provocative, very controversial. But on the merits, setting aside the politics, when you have all but three of the plants making money, and making a substantial amount of money, is it more important to have a bigger level of profit for those plants, or is it more important to preserve some of these other programs," said Pawlenty.

Pawlenty says lawmakers need to realize that tough choices lie ahead, and they're going to be criticized for the painful cuts they have to make. He says the ethanol skirmish is just the tip of the iceberg. He says when he releases a two-year budget next month that erases a projected deficit of more than $4 billion, there will probably be rallies at the Capitol every day.

Pawlenty has pledged to balance the budget without raising taxes, and House Republican leaders say they share Pawlenty's goal. They haven't said where else they'd cut if they restore ethanol funding, but deeper cuts could come in health and human service programs.

A House Republican proposal that will be discussed this week would eliminate an expansion of the state's health insurance program for children, and bump some families from the state's child care subsidy program.

Republican political analyst Sarah Janacek, co-editor of the newsletter Politics in Minnesota, says House Republicans won't go along with everything Pawlenty proposes..

"The governor, of course, proposes and the Legislature disposes, and given that we have a Republican governor and a Republican House, not everybody's going to agree on everything. So in essence it's a great way for the Pawlenty administration to throw stuff on the table. Some of it's not going to work out politically -- not the least of which is ethanol -- and then the House Republicans can fix it," according to Janacek.

Janacek says there may be more rural-urban splits on funding that benefits greater Minnesota.

Senate DFL leaders say they'll try to preserve rural economic development programs. Their budget fix restores funding Pawlenty wants to cut for the 21st Century Minerals Fund, designed to create jobs on the Iron Range.

Senate Majority Leader John Hottinger of St. Peter says he doesn't understand why Pawlenty would cut money for the fund, when Pawlenty just visited northern Minnesotan to express concern about job losses in the state.

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