Gov. Tim Pawlenty is threatening to veto an economic development bill that includes writing off $32 million in state loans for the Xcel Energy Center.
The city of St. Paul has paid back only a little more one-third of the $48 million loan it got from the state to build the arena.
City officials want the state to forgive the loan, so it could use that $30 million to build another multi-purpose skating facility near the Xcel Energy Center.
It would serve as a practice facility for the Minnesota Wild hockey team, and would host other community events.
St. Paul officials also say other Minnesota cities have gotten better deals on their arenas.
The loan write-off is part of a larger state economic development bill, designed to spark up to $5 billion worth of new construction.
Pawlenty said he's prepared to block the entire measure over the loan forgiveness provision. He said he made it clear the loan forgiveness was a sticking point.
"We -- both in writing and verbally -- indicated to the conference committee that we were concerned about that proposal," said Pawlenty. "We even suggested an alternative approach, where if they wanted to give St. Paul some relief, that they give that relief with the expectation that the city would use it for high priority functions, like maintaining police or firefighting services. And they chose to ignore that input."
The Legislature faces a May 18 deadline to adjourn, yet lawmakers and the governor are still far apart on solving a $4.6 billion budget gap.