The plan would cut spending by 7 percent across all budget areas. The largest programs hit are schools, health and human services and aid to local government. In total, the plan cuts $2.4 billion in spending. The plan also relies on $2 billion in unspecified new revenue.
At a news conference, DFL Senate Majority Leader Larry Pogemiller said the cuts are needed to stabilize the budget in the long term. He said Governor Pawlenty's proposal to use one-time money, accounting shifts and spending cuts does not adequately address the problem.
"It's a day of reckoning for Minnesotans, both for elected officials both in the executive branch and the legislative branch," Pogemiller said. "We need to do our duty to balance the state budget for the long-term financial health of the state."
What is most notable is that Senate Democrats are proposing $1 billion in cuts to early childhood education and K thru 12 schools. K-12 funding is required under the Minnesota Constitution and lawmakers have been reluctant to cut those programs for fear of angering voters. Senate Education Finance Chair Leroy Stumpf, of Plummer, said the depth of the budget problem, along with a sputtering economy, mean all programs have to be on the table.
"What I sense is that there isn't a good understanding amongst the public that the negative fallout of trying to balance this budget is going to have an impact on every citizen in the state," Stumpf said. "And that's why E-12 and our education system will participate in that to some extent."
Stumpf said he doesn't think the cuts to some programs will be as steep as the initial proposal indicates because they could be backfilled with upwards of $2 billion in federal stimulus money. For example, he said K-12 funding could get more than $650 million in stimulus spending.
This isn't the first time Senate Democrats have proposed deep spending cuts. In 2007, they initially proposed across the board cuts but later passed an income tax increase on wealthier Minnesotans. Governor Pawlenty vetoed that bill.
DFL Senator Tom Bakk, of Cook, said they may try to raise income taxes again. Bakk, who chairs the Senate Tax Committee, said he's examining all options but said the proposed new revenue will include an income tax hike on the highest income Minnesotans.
"I've got to spend some time with the members of the tax committee to see where the rest might come from but it will be the lion's share," Bakk said.
Bakk said he will oppose any attempts to expand the sales tax to services or clothing. He also said he didn't think raising tobacco taxes is the best idea. Republicans in both the House and Senate are criticizing the plan. Republican Senator Geoff Michel, of Edina, said it's a terrible plan.
"This is not the kind of a budget that gets us out of a jobs deficit," Michel said. "A massive tax increase on our taxpayers in the midst of a recession. Cuts, actual cuts of close to $1 billion in our education system. That's a double blow."
Republicans aren't the only ones complaining. DFL Senator John Marty of Roseville said he hasn't seen a budget plan that he supports yet. He said Governor Pawlenty's plan and the plan being considered by Senate Democrats make too many cuts to health care and education. Marty, who is a candidate for governor, said he would push back against the expected cuts in the Senate proposal.
"I think the state has an obligation to make sure we have a good school system, we have good health care for people," Marty said. "I don't want to make the state make things worse because of bad economic times."
For his part, Governor Pawlenty rejected the plan out of hand.
"They're using a robotic approach to budgeting which is across the board approaches when we should be prioritizing," Pawlenty said. "Some things are more important than others. That's why we said even in these challenging economic times we'd put more money into education, not less."
Pawlenty said he will release his own revised budget plan in the next few weeks.
DFL House Speaker Margaret Anderson Kelliher said there will also be deep cuts in spending in House Democrats' budget plan, but the cuts won't be across the board. She also said education is a priority. Kelliher won't release the plan until next week but House Tax Chair Ann Lenczewski said earlier this week that some sort of new revenue will be on the table.
"Will we propose revenue in the Minnesota house? Yes. But it will be limited, strategic and progressive," Kelliher said. "This isn't new. In 2007 and 2008 we did the same thing. Now it's 2009. The situation is worse."
Lawmakers have until May 18 to balance the budget. That's the constitutional deadline for the Legislature to finish its work.