Gov. Tim Pawlenty on Thursday vetoed a Health and Human Services spending bill, saying it had too many cost increases at a time when government is trying to control health care costs.
But the Republican governor signaled a willingness to reconsider the measure as part of end-of-the-session budget negotiations to erase a nearly $3 billion budget deficit.
Pawlenty has taken issue with an early expansion of Medicaid included in the bill, that would cost the state $188 million before the federal government starts paying for it in full in 2014. He also opposed surcharges on health care providers.
"Part of what we're trying to achieve is not increasing health care costs," Pawlenty said. "This bill doesn't really go very far in that regard."
Pawlenty said he'd be open to expanding Medicaid under certain conditions, to cover low-income single adults with no children who are currently on General Assistance Medical Care and MinnesotaCare.
"We've been taking care of single adults without kids in one form or another ... for 15, 17 years," he said. "We just have to figure out the way to pay for it and the mechanics of it."
DFL leaders have stressed that the state will receive $1.4 billion from the federal government by expanding Medicaid coverage.
DFL House Speaker Margaret Anderson Kelliher said in a written statement that Pawlenty's veto doesn't make sense, given the state's larger financial problems.
"It's good value for Minnesotans and their tax dollar. It's a situation where for $188 million in state funding, we can attract $1.4 billion in federal money into the state, and cover Minnesotans in a better way with health care," she said.
But Kelliher also acknowledged that the Health and Human Services bill had come up in discussions about an overall budget solution.
"There's portions of the budget that can be solved in that Health and Human Services bill," Kelliher said.
Rep. Tom Huntley, DFL-Duluth, and Sen. Linda Berglin, DFL-Minneapolis, met with Pawlenty's staff on Wednesday and again Thursday to see if the two sides could come to an agreement on the bill.
Lawmakers have until midnight Sunday to fill the budget hole. Pawlenty plans to attend the Governor's Fishing Opener in northern Minnesota Friday and Saturday, so there was some pressure to work out a deal Thursday night.
DFL leaders still want any deal that uses a $1.7 billion payment delay to schools to help balance the budget to also include a way to pay back the money.
Pawlenty on Thursday again urged lawmakers to make the unallotment cuts he made last summer permanent, but so far, DFL leaders have resisted.
The Minnesota Supreme Court struck down one of those cuts, meaning legislative action is needed to stop other programs from seeking to get their funding restored.
If lawmakers don't solve the budget deficit by Sunday, the state could face a severe cash flow issues and have a hard time paying its bills.
In crafting a plan to fill the deficit in the current 2010-2011 budget cycle, lawmakers were paying close attention to the projected deficit for 2012-2013.
"It'll help a great deal if this Legislature and the administration can make more cuts this year, because that will lighten the load next year," Pawlenty said.