Democrats in the Minnesota House and Senate are taking issue with Gov. Tim Pawlenty for including a big chunk of federal money in his plan to erase a $1.2 billion state budget deficit.
The Republican governor has been a frequent critic of federal spending, but the plan he unveiled yesterday relies on Congress to deliver $387 million in new Medicaid funding to help balance the books.
DFL leaders say Pawlenty fell far short in his pledge to solve the state budget deficit through spending cuts alone. They say his supplemental budget proposal delivers only $700 million in permanent reductions in spending, with the remaining $500 million reached through one-time money.
DFL Senate Majority Leader Larry Pogemiller was particularly concerned that Pawlenty is counting on the passage of federal legislation that would bring in $387 million in new Medicaid money.
"I've been here over 25 years, and I've never seen a budget put together based on what the federal government might do," he said.
Pogemiller raised the issue during a meeting of a House-Senate advisory panel that was reviewing the governor's budget proposal. He's concerned about the uncertainty of the federal money, as well as its potential impact on the state's credit rating.
Sen. Richard Cohen, DFL-St. Paul, wondered how a Republican governor, who's also a potential 2012 presidential candidate, can travel the country blasting Washington Democrats for spending too much and then accept some of that money to balance the state budget. Cohen called it a "slight touch of hypocrisy."
"If there's a concern on the part of the administration that what the president is doing is not the correct course of conduct, why would as a state would we participate in that?" Cohen said. "Why would we encourage the president and the Congress to do inappropriate things?"
In the governor's defense, state Management and Budget Commissioner Tom Hanson said the use of federal Medicaid funds in the supplemental proposal is no different than the use of federal economic stimulus funds to balance the budget last session.
"We pay taxes to the federal government, and last I checked we are still getting about 70 to 80 cents on the dollar from the feds. So, I think we're, as a state, due," Hanson said. "And I'd rather have the money come here than Missouri, Texas, Utah, Iowa or Wisconsin.
Later in the day, Pawlenty said he will propose more spending cuts if the Medicaid money doesn't come in time. He also said there's nothing inconsistent about accepting federal money for a federally mandated program.
"Every state, every governor always has participated in the Medicaid program, and it would be unrealistic for Minnesota to say it's going to pull out of the Medicaid program," the governor said.
Other states are making similar assumptions about getting the Medicaid money, which was already been approved in the House and is now awaiting action in the Senate.
Ann Kohler of the National Association of State Medicaid Directors, said the funding measure extends a federal match contained in last year's stimulus bill. Kohler said all states need the money.
"This lets them keep their Medicaid programs, at least the eligibility part, intact," she said. "Because the stimulus required states to not cut eligibility if they received this money."
Kohler is optimistic about the bill's chances, but others aren't so sure.
Minnesota Republican Rep. John Kline says there's never any guarantee of what Congress will do, especially in the current political climate. Kline said he couldn't support a big spending bill, even if it helped his home state's budget.
"If I believe that it spends too much money at a time when we're running record deficits and piling up a record amount of debt, then I wouldn't support additional funding," Kline said.
Despite the dispute over federal money, DFL leaders say they mostly agree with other significant parts of the governor's budget.
Pogemiller predicted approval of Pawlenty's proposed spending cuts for health care, social services, state agencies and higher education. He said only a cut in aid to cities and counties would not be as deep as in the governor's plan.