With the light now fully shining on the projected $5.3 billion state budget deficit, lawmakers today (Thursday, Dec. 4) fired the opening political salvos over an issue that will cast the longest shadow in the upcoming legislative session.

Gov. Tim Pawlenty spoke of the deficit as a challenge but also as an opportunity to reform and streamline state government.

News the state faces a $5.2 billion budget deficit — $426 million this two-year spending cycle, $4.8 billion the next — had Gov. Tim Pawlenty and legislative leaders talking about job creation, zero-based budgeting, a fiscal challenge calling for sacrifice.

(Photo by T.W. Budig, ECM Capitol Reporter)

by T.W. Budig
ECM Capitol reporter

With the light now fully shining on the projected $5.3 billion state budget deficit, lawmakers today (Thursday, Dec. 4) fired the opening political salvos over an issue that will cast the longest shadow in the upcoming legislative session.

Gov. Tim Pawlenty spoke of the deficit as a challenge but also as an opportunity to reform and streamline state government.

Pawlenty, in taking action on the current two-year spending cycle $426 million budget deficit, ordered discretionary spending cuts in state government — the use of the state budget reserve will knock the size of the deficit down to $271 million, he pointed out.

In comparison to the size of the overall state budget, Pawlenty styled the remaining debt as manageable.

But also confronting the governor and Legislature is the $4.8 billion budget deficit projected for the next two-year spending cycle (2010-11).

Tom Hanson, comissioner of Minnesota Management and Budget talks about the predicted budget deficit.

If the state remained within the graces of the $32 billion in projected revenue for the next spending cycle, there will be no budget deficit, Pawlenty argued.

Starting at zero

"We're going to start at zero and build our way up to $32 billion,” Pawlenty said of his administration's approach to budgeting for next biennium.

The governor argued that zero-based budgeting forces lawmakers to truly set priorities — Pawlenty listed military veterans, public safety, and K-12 education as his top three priorities, respectively.

The governor also opined that state health and human services spending was taking place at a clip that was not sustainable.

"It will be hard. And it will be challenging,” he said of confronting the budget crunch.

As he did earlier in the week, Pawlenty blasted spending in Washington — it's a ponzi-scheme destined to fail, he opined of recent bail outs — but also indicated a willingness to accept federal dollars in managing the budget deficit.

The governor will submit his budget proposal to lawmakers on Jan. 27.

One proposal it will contain would allow local government, by board vote, to opt-out of state mandates they find objectionable.

Pawlenty will not turn again to Indian gaming as a means of raising state revenue, he said.

The governor's attempt at reshaping the gaming contour of the state in his first term failed.

Cities should plan for salary freezes

In taking reporters' questions, Pawlenty recommended that city and county officials plan for salary freezes.

Immediately following the governor's press conference Senate and House Democratic leaders gave their take on the deficit.

"This crisis didn't start here, but the solutions will begin here with the Legislature,” said House Speaker Margaret Anderson Kelliher, DFL-Minneapolis.

"We also know that the biggest factor in this crisis is a lack of jobs,” she said.

Kelliher warned against approaching the budget deficit as a mathematical exercise.

The idea should be to favorably position the state for a recovery, she explained.

Democrats, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, and House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, spoke of the importance of job creation — a theme echoed by Republican leaders.

Although Democrats spoke of beginning the task of trimming the deficit by looking for budget cuts, they did not rule out tax increases.

They did not want to discard any options at this time, they indicated.

Answer to the deficit

House Majority Leader Tony Sertich, DFL-Chisholm, said that anyone who believed they had the answer to the budget deficit within 24-hours was "neither being serious or thoughtful.”

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, indicated that budget cuts in the area of health and human services would be problematical for Democrats.

"Is there any Democrat who's not concerned about health care — come on,” he said.

Pawlenty and Democratic leaders are expect to breakfast at the Governor's Residence tomorrow morning to discuss the budget situation.

Democrats plan to travel the state with the governor's budget, once released, to gather public comment.

House and Senate Republicans late afternoon also comment on the budget picture.

"We are willing to work with Democrats to solve the issue,” said House Minority Leader Marty Seifert, R-Marshall.

Republicans backed Pawlenty's stance on not raising taxes.

(Photo by T.W. Budig, ECM Capitol Reporter)