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Minnesota's constitution requires a balanced budget to be in place by the end of June. State lawmakers will likely need most of their available time to reach a budget agreement that solves the largest projected deficit on record.

 
     DFL House Speaker Margaret Anderson Kelliher of Minneapolis said she is ready to tackle the deficit by using a new approach to the state budget.


"We will weather this storm. We will balance the budget," she said. "And we must plan for the future of Minnesota."

 Kelliher wants to start from scratch and decide which programs are priorities worth keeping and which aren't. She has already indicated education and job creation will be priority areas. 

Kelliher said the budget solution will be largely spending cuts, but she's not ruling out the possibility of tax increases. 


"We are not going to take things off of the table, neither cuts nor looking at what some of the other solutions might be," she said. "You can't build a house from the basement up without having a good toolbox. And taking away a whole tray of the toolbox would seem to be a little short sighted."

     Kelliher's view of taxes is at odds with the Republican governor she'll eventually be negotiating with. Gov. Tim Pawlenty has made a career out of opposing tax increases, and he says this session is no different. 

Pawlenty said he'll unveil a budget proposal later this month that holds the line on taxes and spending. He said his spending limit is $32 billion, which is the current level of incoming state revenue. The governor said he'll also set clear priorities in his budget.

"For me, the first area of priority is going to be military and veterans affairs. The second one is going to be public safety. The first order of government and first responsibility of government is to protect it's citizens," Pawlenty said. "And so those are two that will be at or near the top of the list. And a third will be K-12 education and then we're going down from there. And when we get to $32 billion, some things are going off the table."

     Pawlenty is also promising significant reforms aimed at streamlining state government. The governor hasn't revealed any specifics, but he has said his targets for reform will include taxes, K-12 education and health and human services. Pawlenty said the fiscal crisis presents an important opportunity for change. 

"I think the public is going to expect and demand dramatic reform and improvement and change from government," he said. "And we're going to propose it and deliver it. Even the interest groups I don't think are going to be able to stand in the way of what needs to be done to change these systems."

     House Republicans agree with the governor's approach. Minority Leader Marty Seifert of Marshall said the entire budget is open for review. 

"Well over 75 percent is higher ed., K-12, local government and health and human services," Seifert said. "And so it's in those areas that a lot of savings are going to have to be derived. But it's not just a simple math problem. There are going to have to be a lot of different strategies employed to make this work."

     Democrats are preparing for changes, too. Senate Majority Leader Larry Pogemiller of Minneapolis said he wants to revamp the Department of Employment and Economic Development. He also suggested other state agencies might be ripe for reorganization or merger. 

Pogemiller said he wants to work collaboratively with the Gov. Pawlenty and will keep an open mind when he sees the governor's budget proposal.  

"It will not be dead on arrival," he said. "And I think we want to comb through it to find the ideas of commonality. And in the areas where we don't think the governor's ideas are the best, we will come up with alternatives. And I think that will take some time.

     Pogemiller and Pawlenty are already in agreement on one potential issue. They've both thrown cold water on state financing for a new Minnesota Vikings stadium under the current economic conditions. 

State finance officials are warning that those conditions, along with the projected budget deficit, will likely worsen when they release their next economic forecast in February.

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