A $6 billion deficit and already little agreement

The next governor and Legislature are facing a $6.2 billion projected deficit over the coming two years and there are widely varying views on how to fix it.

Republicans who will control the Legislature say they won't support a tax increase as a part of the budget balancing plan -- a dramatic difference from Democrat Mark Dayton, who will be the next governor if he holds his lead after the recount.

During the last four years, Gov. Tim Pawlenty liked to refer to himself as a goalie who vetoed legislation from a DFL-controlled Legislature.

If the vote totals in the recount stay the same, Dayton will also play goalie but on the other end of the ice.

Throughout the gubernatorial campaign, Dayton has been pushing a plan that would raise income taxes on Minnesota's top earners as a way to erase part of the state's budget deficit. That was when the deficit was projected to be $5.8 billion. Now, finance officials are projecting a deficit that's nearly a half-billion dollars bigger.

"I think we're going to have to look at all of the options for both the revenue side and the expenditure side," Dayton said. "I think we're all going to have to put all of our cards face up on the table."

Dayton says he's sticking with his income tax plan and said every other option, including expanding gambling, needs to be on the table.

He said he met with former finance commissioners and other budget experts to discuss ways to fix the deficit, but says his plans are still in the hypothetical stage.

Dayton, who led Republican Tom Emmer by 8,770 votes before the recount started, says he's spending every waking moment worrying about the state budget and a possible transition to the governor.

"These enormous challenges make it even more imperative that the next elected governor take office on January 3rd as Minnesota's constitution provides so he and his administration's budget team and agency heads will have enough time to present a balanced, responsible budget," he said.

Dayton spoke with reporters about the state's fiscal situation. That's in direct contrast to Emmer, who has mostly stayed out of sight since the recount began on Monday. Emmer had little to say about the state's budget or the recount after he left a budget briefing on Thursday morning.

"Things are going great," Emmer said.

"Do you think you'll be governor?" a reporter asked.

"See ya guys," Emmer replied.

Emmer later released a two-paragraph statement praising Pawlenty and blaming Democrats for the shortfall.

When the legislative session starts in January, Republicans will control both chambers of the Legislature for the first time in 38 years and will be forced to deal with the largest budget deficit in the state's history.

"This really and truly is a spending issue," said incoming Senate Majority Leader Amy Koch, who says the state's budget problems are mostly caused by spending increases in areas like Health and Human Services and K-12 schools.

She and other Republican leaders say they won't support a tax increase but didn't offer specifics on how they'll fix the budget.

"Minnesotans told us to restrain government spending, reform government and grow private sector jobs, and the best remedy for the ailing economy is growing private sector jobs not growing government spending," Koch said.

Democrats in the House and Senate say a budget balancing plan that relies on spending cuts alone will harm schools, nursing homes and will drive up local property taxes. They characterized the $6.2 billion budget deficit as Pawlenty's "legacy to the state."

Pawlenty, who called the $4 billion budget shortfall he inherited in 2003 the "Incredible Hulk of budget deficits" is now downplaying the $6.2 billion budget deficit he's leaving his successor. He characterized the projected deficit as "fiction." Pawlenty focused on the $399 million budget surplus in the current biennium and said he'll finish his term with a balanced budget.

"The projected deficit in the future is fictional in the sense that it's a projection based on a bunch of events that aren't going to happen."

Pawlenty blamed Democrats for not adopting his full budget plan last session. But Democrats point out that Pawlenty's past budget plan and the surplus he's touting aren't a result of fiscal belt tighetning.

They say it's a result of federal funds signed in to law by President Obama -- the person Pawlenty may hope to replace in the White House.

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