With the state facing a $4.8 billion budget deficit, Gov. Pawlenty has called for freezing all state government wages for the next two years. Pawlenty will release his detailed plan for balancing the budget next week. But he has already said he also wants a wage freeze for any Minnesota government entity that accepts state money.
"Workers in the private sector are facing big layoffs, big pay cuts and sharply reduced hours," he said. "Government employees will experience layoffs too. However, we should do what we can to minimize them and a wage freeze will help."
Pawlenty is also proposing unspecified incentives for counties to work together in regional partnerships to provide human service programs. He also wants cities and counties to team up with the state to save money on the purchases of road salt, paper, information technology and other services.
But the governor's suggestions drew quick criticism from House Majority Leader Tony Sertich, DFL-Chisholm.
"So much for local control from a Republican governor to let local elected officials to make decisions that may be different in Minneapolis and St. Paul, that might be different in Chisholm and Woodbury and all over the state of Minnesota," he said.
Local government leaders are also raising concerns.
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Tim Flaherty of the Coalition of Greater Minnesota Cities said a pay freeze might be a good way to avoid layoffs, as long as it would extend equally to all cities, not just those receiving state aid. But Flaherty said there are some big legal hurdles in the way of such a move.
"Local governments have contracts that sometimes run for two or three years," he said. "So, if you're at the beginning of a contract period, let's say you signed last July before the fiscal crisis, it's our belief that you cannot, that the state cannot nor the local governments cannot override those contracts. And so it would be a particular problem, legal problem to do that."
Flaherty's organization is also pushing back on Gov. Pawlenty's assertion that cities and counties will have to get by with less state funding. Cities already took a hit in their Local Government Aid payments last month to help solve a short-term budget deficit.
Flaherty said LGA is critical to maintaining the economic health of cities throughout the state.
"We've taken a large cut," he said. "We should not be targeted again for another cut. And we will make the case that Local Government Aid should be a very top state priority."
The governor said he wants to make up for aid cuts to local government by reducing or eliminating as many state mandates as possible. But Flaherty said the burdensome mandates on cities are fairly minimal.
It's a different story for counties. The state has all kinds of rules for what they have to spend money on.
Jim Mulder of the Association of Minnesota Counties said his organization has been working to improve the relationship with state government. Mulder said county leaders have also made a list of 60 mandates that they'd like to see loosened. He said one example is the spending requirement for libraries.
"Local governments raise $190 million for public libraries," he said. "We are not allowed to reduce that number no matter what the rest of the economic situation is. We raised property taxes this year $4.5 million statewide for the public library system. But next year, we're not allowed to reduce that."
Mulder said county leaders are encouraged by Pawlenty's response to their work. During his State of the State speech, Pawlenty said the Association of Minnesota Counties had offered a "bold plan" to redefine the county-state relationship.