Gov. Tim Pawlenty's recently-announced plan to balance the state's budget includes a mixture of cuts, the use of one-time money and a reliance on federal money that isn't available yet.
It's a budget blueprint that Pawlenty's used in the past and he hopes it will erase a $1.2 billion budget deficit. Cuts in local government aid, the use of one-time money and payment shifts account for about half of the plan Pawlenty announced Monday. Mix in cuts to health and human services programs and he almost reaches his goal of erasing the entire budget deficit.
$250M CUT IN LOCAL GOVERNMENT AID
Pawlenty's budget fix relies on $250 million in cuts in aid to cities and counties. State funding of local governments has been a political target for the Republican governor since he took office in 2003 and he continues to rely on the cuts to help get the state out of red ink.
Pawlenty said his proposed cut, along with his $300 million cut to the program in July, will mean a 25 percent reduction in aid to local governments this budget cycle. He said the cuts to LGA and health and welfare programs are necessary to protect funding for K-12 schools and military and veterans affairs programs.
"The things that we can impact are being impacted more broadly and then we made a conscious choice to set some priorities," Pawlenty said. "Given the likely economic outlook for the state...now and the intermediate term, you can't have a $2.1 billion local government aid program. You just can't."
But city officials argue that Pawlenty just can't continue to target cities to balance the budget. Floodwood Mayor Jeff Kletscher says his northern Minnesota city will see a reduction of about $33,000 in state aid. He said Floodwood, which has a population of 530 people, has a total budget of $520,000. Kletscher said cutting $33,000 is roughly equivalent to eliminating the salary of one of the city's four full-time employees.
"The fat is gone," Kletscher said. "I have no parks. I have no community rec center. I have no swimming pool. I have no public library so I can't cut that fat out. My services are what I provide. Plowing, mowing, trying to take care of our streets and the services that our folks want including police and fire protection."
Kletscher said he thinks a mix of cuts and property tax increases will probably be needed to offset the proposed state cut. Pawlenty is pushing the Legislature to impose a permanent property tax cap on local governments. He also argues that raising taxes in a down economy would further weaken the state's economy.
BUDGET RELIES ON UNAPPROVED FEDERAL MONEY
But while Pawlenty is telling local government officials to rely less on state funding, he's looking to the federal government to help fix Minnesota's budget problem. In fact, he's relying on money that isn't even available yet.
Pawlenty's budget plan uses $387 million in federal Medicaid money to balance the budget, but the federal government hasn't approved the spending. DFL House Majority Leader Tony Sertich noted that Pawlenty has been a frequent critic of Democratic President Barack Obama and federal spending the governor has compared to a ponzi scheme. Sertich said Pawlenty is speaking hypocritically.
"He is relying on the federal government to give us money to balance this budget," Sertich said. "Gov. Pawlenty seems to agree with federal funding while candidate Pawlenty travels the state disagreeing with himself."
For his part, Pawlenty says he's hoping the funds come through. If not, he said he'll find the cuts elsewhere.
"If we don't get this this spring or by the time the Legislature is out then I think we need to pull that piece back and reduce state spending further because it does need to be available and booked before the Legislature goes home," Pawlenty said.
Pawlenty is also relying on one-time money to balance the budget. He taps roughly $50 million in special funds, grants and payment delays to help erase the deficit. DFL Senate Majority Leader Larry Pogemiller said Pawlenty's budget isn't honest.
"His suggestion that he can balance the budget with cuts only...I think he has not done that yet and I request that he does that because this proposal does not balance the budget with cuts. It just doesn't do it," Pogemiller said.
Pawlenty correctly predicted that DFL legislative leaders wouldn't like his plan and said they should put forward an alternative that doesn't include tax increases. Pawlenty said he would use his executive authority to balance the budget only as a last resort.