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In crucial week, budget deal begins to gel after Senate leaders concede
February 4, 2003

is the apparent winner in a standoff between the House and Senate over the size of cuts in the state budget. He's shown here during an appearance on MPR's Midday (MPR Photo/Tom Scheck)

St. Paul, Minn. — (AP) - With Gov. Tim Pawlenty promising to correct Minnesota's short-term budget problem "one way or the other" this week, the Senate and House made progress Monday toward a compromise.

Legislative leaders adopted a $461 million spending reduction target to cure a $356 million projected shortfall and set aside $105 million more in case the state's economy falters before the fiscal year ends in June. It marks a major concession by the DFL-led Senate, which moved within $7 million of the benchmark set by a GOP-allied House and governor.

	Senate Majority Leader John Hottinger

"We've moved almost all the way in an effort to get this done," said Senate Majority Leader John Hottinger, DFL-St. Peter. The Senate originally approved a package with $384 million in total savings.

Pawlenty called the development "significant," and said it makes him hopeful that he won't need to balance the budget on his own, a process called unallotment.

"It's probably more likely that there will be an agreement than there's going to be unallotment," he said. "But make no mistake, we need an agreement by later this week or I'm going to unallot."

Pawlenty said lawyers advising him believe he has broad power to trim spending to cover a projected deficit and make additional cuts if a bigger gap is anticipated. He plans to describe his unallotment plans to lawmakers on Wednesday, although he has given them until Friday to strike their own deal.

While they now agree on the baseline number, House and Senate leaders both say they remain hung up on several details.

There are major differences over the amount of cuts that will carry into future years versus one-time payment cancellations. The House is pushing for more lasting cuts that chip further into a $4-plus billion deficit forecast for 2004-05; Senate leaders say long-term funding decisions shouldn't be made until lawmakers can fully gauge the consequences.

The House plan would give Pawlenty's administration greater freedom to hire private vendors for work long done by public employees. The House and Pawlenty also are pursuing law changes that would force some state workers to take longer lunches off the clock or extra days off without pay.

To help reach the new goal, Senate leaders said they were prepared to: increase their cuts in ethanol subsidies from $2 million to $7 million; reduce aid to state colleges by $50 million instead of $30 million; cancel $5 million more in unstarted construction projects; and take $7 million out of a $59 million Iron Range development fund that they were trying to fully protect.

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