With less than 48 hours to go until the end of the legislative session, what had looked like progress toward a deal on a nearly $3 billion budget deficit has turned sour.
Democrats say Republicans are blocking a health care plan that they argue is central to a budget compromise, and Republicans say they're concerned about the cost of the plan and worry that it's a pathway to "socialized medicine."
After saying for three days that they were optimistic that a deal could be reached before a Sunday midnight deadline, DFL legislative leaders now say the Republicans in the House and Senate are standing in the way of a deal.
Gov. Tim Pawlenty returned to St. Paul Saturday afternoon after the governor's fishing opener on Lake Kabetogama in northern Minnesota. He was expected to meet with legislative leaders after arriving to the Capitol.
After a conference call with Pawlenty Friday night, DFL House Majority Leader Tony Sertich said House Republicans are unanimously opposed to a plan that would shift low-income Minnesotans from two state health plans to the Medicaid program under the new federal health care law.
"The conversation was a lot more about what the Republican minorities need now and the governor is really hinging his budget support on what the minorities in the Legislature want," Sertich said. "I have a fear that he may use that as an excuse to bring that into special session."
Democrats have mostly agreed to ratify Pawlenty's spending cuts and are open to Pawlenty's proposal to delay payments to schools, but they want the early expansion of Medicaid in return. And that has become the main sticking point in the discussions.
Pawlenty and Republicans in the Legislature initially balked at the $166 million in surcharges on hospitals and other health care providers to pay for the program. But some lawmakers are now arguing that the proposal is a part of the new federal health law.
"Is this the path to socialized medicine?" asked Republican Senate Minority Leader Dave Senjem. "And that may be a strong statement, we don't know that or not, but I think it's a statement or expression that we have over the direction of the health care debate in this country. Where is it taking us?"
Senjem also said the members in his caucus are concerned about taking money from the federal government when there's a federal deficit of $13 trillion. Senjem said recently that he's willing to book $400 million in other federal funds as a "contingency" to help balance the state's budget deficit. Congress hasn't yet appropriated those funds.
Pawlenty said earlier this week that he was open to the idea of enrolling in the federal health plan but his spokesman released a statement late Friday night saying the governor considered the DFL proposal and doesn't like it.
DFL Senate Majority Leader Larry Pogemiller said he's ready to send Pawlenty upwards of $800 million in unspecified spending cuts -- roughly a quarter of the full budget deficit -- in a bid to end the session if they can't reach a deal with the governor.
Democrats say the state faces a severe cash crunch because of Pawlenty's mishandling of the budget that could prevent Minnesota from issuing bonds later this year.
"For sure, I think we should send $700 or $800 million in cuts or budget reductions," Pogemiller said. "Some of those are budget reductions that the Governor doesn't support, but at some point you have to do something."
Pawlenty's spokesman emphasized that the governor is focused on reaching a budget resolution, but the issues facing Pawlenty, who is pondering a run for the White House in 2012, are difficult. The governor has said the state's cash flow situation is in peril after the Minnesota Supreme Court called into question his authority to make spending cuts on his own.
If he chooses not to make a deal, the self-proclaimed fiscal conservative could be managing a state that has severe financial problems. If he makes the deal, he would be forcing fellow Republicans to buy into a federal health care plan he's been highly critical of.