When Gov. Tim Pawlenty announced his budget balancing plan, he said hospitals would be largely spared from further cuts. But some hospital administrators disagree.
Pawlenty's plan protects in-patient services, but it speeds up an earlier decision to eliminate state-paid health insurance for low-income adults with no children. Dr. Michael Belzer, the medical director at Hennepin County Medical Center, said the governor's actions will cost his facility $50 million a year.
"Hospitals, and safety net hospitals specifically, operate on razor thin margins in good years," he said. "And when you're looking at a 10 percent cut, it's serious and significant and has us very, very troubled about whether we're going to be able to sustain the programs that we're proud of and continue to serve the community like we have."
Minnesota governors have used unilateral power to cut spending known as unallotment in the past to resolve short-term budget deficits that show up late in the biennium. Pawlenty's plan for unalloting at the start of a budget cycle has raised questions about the legality of his budget-balancing actions.
Senate Majority Leader Larry Pogemiller, DFL- Minneapolis, said there might be lawsuits, but he's not encouraging them. Still, Pogemiller said he thinks the governor is abusing the unallotment statute.
"This would be the sixth time it's used in the history of the state," he said. "Gov. Pawlenty will have used it three times out of the six. In 70 years, he will have used it 50 percent of the time. And these cuts that he's proposing now are 10 times larger than any other cuts made under this statute. So, I think it's and unwise of authority and that's what I think history will write."
The biggest piece of the governor's budget solution is nearly $1.8 billion in accounting shifts and delayed payments to school districts.
About $600 million in one-time savings would come from a change in the way school districts count local property tax receipts. The governor's plan shifts the timing on when schools recognize that money, which in turn helps the state balance its budget.
Pogemiller said the law doesn't allow Pawlenty to do that without legislative approval.
"It's pretty clear to me that he does not have the legal authority to do that," he said. "He had asked the Legislature for authority to do that in his budget. And when he vetoed the tax bill, he did not get that authority. And so now he thinks he's going to implement it on his own."
But neither the governor nor his chief fiscal advisor see any problem.
"We are confident of our legal authority to do this," said state Management and Budget Commissioner Tom Hanson.
Hanson has spent a lot of time reading the unallotment statute that dates back to 1939. Hanson said it's clear to him that the law allows for the reduction of spending, as well as the suspension or deferment of another statute to achieve the same effect.
"All we do is make sure that we stay within the bounds of the statue, which the Legislature passed and Gov. Stassen signed into law for unallotment," he said. "And it's been used a few times and we're well within the precedent and ability to utilize the statute."
Hanson will have to defend the unallotment process and Pawlenty's proposal Thursday when he meets with House and Senate leaders.
The Legislative Advisory Commission is expected to question and criticize the governor's plan. But the panel does not have the authority to block the cuts.