Session 2004 Bonding Education Finance and taxes Gambling Health Care Public Safety Social Issues Social Services Stadium Issues Transportation Audio GOP budget fix sets stage for showdown on gambling (story audio) Photos Speaker Steve Sviggum Senate Majority Leader Dean Johnson More from MPR Hospitals, others line up to criticize plans for more cuts (03/17/2004) Pawlenty steers clear of gambling, reserves in budget fix (03/04/2004) State's budget situation better than expected (02/27/2004) Your Voice Join the conversation with other MPR listeners in the News Forum.

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GOP budget fix sets stage for showdown on gambling
by Laura McCallum, Minnesota Public Radio
March 17, 2004

Speaker Steve Sviggum of Kenyon says the plan largely mirrors Gov. Pawlenty's plan released two weeks ago. But he says House Republicans don't support some of the governor's proposed budget cuts. At left is Erik Paulsen, the House Minority Leader. (MPR Photo/Laura McCallum)

House Republican leaders have released the outline of their budget plan. It relies on money from a casino at the Canterbury Park racetrack to balance the state budget. House Republicans say they went along with most of Gov. Pawlenty's budget recommendations. But the plan they released has some holes that Republican leaders say they'll fill in later.

St. Paul, Minn. — House Republicans handed out a press release with no dollar amounts for their proposals. They say their plan will erase a projected $160 million deficit without raising taxes or dipping into the state's cash reserves. Speaker Steve Sviggum of Kenyon says the plan largely mirrors Gov. Pawlenty's plan released two weeks ago. But he says House Republicans don't support some of the governor's proposed budget cuts. "The House Republican caucus does not want to reduce funding to some needed services to the elderly of nursing homes, for hospitals, for our pharmacies," he said.

Like the governor, House Republicans plan to use $70 million from a surplus in a health care fund that pays for the state's subsidized health insurance program. They also support the governor's proposal to collect sales taxes on car leases at the time of sale, which would bring in about $35 million in the current budget cycle. And the plan relies on $30 million from a proposed casino at Canterbury Park. Sviggum says polls show Minnesotans support the "racino," and he believes the state should get a percentage of gaming money.

	Senate Majority Leader Dean Johnson

"Wisconsin gets some revenues. Iowa gets some revenues. Every other state gets revenues except for probably two - California being one of them and I forget what the other is," he said.

Minnesota negotiated compacts with the state's 11 Indian tribes about 15 years ago that don't require any direct revenue sharing with the state. Gov. Pawlenty's budget plan does not include gaming revenues, and Senate DFL leaders don't like the racino plan.

"Gambling, under any circumstance, should not be used to balance the state's budget," said Senate Majority Leader Dean Johnson of Willmar, who says gambling revenues are too volatile. Johnson says Senate Democrats are still working on their budget plan. He says their plan is unlikely to tap the surplus in the health care access fund, which Johnson says should be used for health insurance. He says the Republican car lease proposal is also problematic.

"Well, that's a tax increase. It's not even a shift, that is a tax increase," Johnson said.

Johnson says Senate Democrats will not propose a state tax increase. He says Democrats have talked about closing some corporate tax loopholes.

House Republican leaders say they'll fill in the blanks in their plan as it moves through the various budget committees. They couldn't say at this point how much of their budget fix is one-time money, and how much is permanent spending cuts that will help reduce future deficits.

Their plan comes amid growing calls for fiscal responsibility from lawmakers. Four legislators -- two Democrats, a Republican and an Independence Party member -- sent a letter to the entire Legislature this week, criticizing the amount of accounting shifts and borrowing in the last few years.

Rep. Dan Dorman, R-Albert Lea, says the Legislature should have an honest discussion about whether it's putting off major budget decisions.

"We still may choose to say, 'hey, we don't want to make the tough choices yet, so we're going to wait until after the next election,' but if we're we're going to do it, I think we should do that consciously and above board," Dorman said.

The latest revenue forecast showed a projected deficit of more than $1 billion in the next two-year budget cycle, if inflation is taken into account. Speaker Sviggum says the House Republican plan will help reduce that amount. Gov. Pawlenty reacted to the House budget plan by urging Republicans to make budget reforms or spending cuts that are "necessary for a reponsible budget now and in the future".

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