Few new ideas on budget as deadline nears

With less than five days remaining in the legislative session, few new ideas emerged Wednesday at the State Capitol on how to solve a nearly $3 billion budget deficit.

Republican legislative leaders were trying to put together a plan to cut spending that would satisfy both the governor and the DFL-controlled House and Senate. And DFL leaders were entertaining ideas from Republican House members on ways to raise more revenue.

But no budget deal was imminent, as lawmakers struggled to overcome several points of contention:

-- DFL lawmakers are resistant to a $1.7 billion payment delay for K-12 schools without a way to pay back the borrowing.

-- Republican Gov. Tim Pawlenty has refused to go along with a budget plan that raises additional revenue through increased taxes, fees, surcharges or new gambling money.

-- Republican legislative leaders have suggested making Pawlenty's unallotment cuts permanent, but DFLers want to protect certain areas from cuts.

Pawlenty met with legislative leaders again Wednesday afternoon to discuss possible solutions. The leaders said afterward that they discussed many ideas but there was no deal.

"Right now I'm very willing to hear what the minority parties come up with in the House and the Senate."

Earlier, as he purchased a fishing license for this weekend's opener, Pawlenty said he thinks the issues with the budget are "pretty well-defined."

"There's no reason they can't get this resolved," he said.

But he said he thinks it's clear that Minnesotans want to rein in government spending. "If I were to give [the DFL] a tip, it would be to listen to what the people are saying," he said.

The $3 billion budget deficit was created by a Minnesota Supreme Court ruling last week that struck down one of Pawlenty's unallotment cuts he made after the legislative session had ended last year. Because more programs could go to court to try to get their funding restored, Pawlenty and lawmakers are trying to erase the deficit through legislative action.

On Tuesday, Pawlenty vetoed a bill that would have created a new fourth-tier income tax to generate more than $400 million in new revenue to solve the budget deficit. Afterward, Pawlenty urged Republican leaders to work on crafting a plan that could satisfy him while also earning enough votes in the Legislature.

Republican leaders suggested making additional cuts to pay back a $1.7 billion school payment delay, but that idea wasn't well received by Democrats.

DFL House Speaker Margaret Anderson Kelliher called the idea a "baby step" in the overall negotiations and said it wasn't a real plan.

"It was not a full budget solution. I didn't really necessarily expect one," Kelliher said. "It's kind of like we have to agree to step one before they'll reveal step two to us. And I guess I'm going to be generous to them. They're not used to doing complex budgets. It's a difficult thing."

Meanwhile, Kelliher said at least two Republicans have told her caucus that they might be willing to support a tax on alcohol to generate revenue. But Republican House Minority Leader Kurt Zellers said Kelliher was mistaken.

"No one in our caucus has talked about any kind of tax increase, whether it be sin tax, income tax, any of those kind of things," he said. "The economy is so fragile right now, you raise any kind of tax and it's going to lead to a decrease in revenue."

With Pawlenty opposed to any new taxes, any revenue plan would need support from all Democrats in the House and three House Republicans to override a Pawlenty veto. The Senate has a veto-proof majority.

Kelliher also said leaders were keeping open the possibility of an override attempt of Pawlenty's veto of the budget plan from earlier this week that contained the income tax increase.

"Right now I'm very willing to hear what the minority parties come up with in the House and the Senate," she said. "The override vote is always an option as well."

Gov. Pawlenty and lawmakers have only until midnight Sunday to finish their work. For some veteran lawmakers, the situation was worse than they've seen in the past.

Rep. Loren Solberg, DFL-Grand Rapids and chairman of the House Ways and Means Committee, said this year's end-of-session logjam could be the worse he's seen in 28 years in the Legislature.

"I don't think I've ever seen them at this kind of a stalemate nor at this kind of magnitude of the problem," he said. "There just has to be some creative thinking someplace. And so far, you can't just keep saying no."

(MPR reporter Tim Nelson contributed to this report.)

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