Getting people to work will be the number one use of the $9.1 billion in federal stimulus money coming to Minnesota.

Members of the ECM Editorial Board paid a visit to the Minnesota Legislature at the State Capitol, St. Paul, last week and spoke with some of the state legislative leaders who are trying to put together reactions about how to utilize federal stimulus money. They are also looking at all methods of making cutbacks in order to balance the state budget.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, makes a point about some heavy budget work ahead of the Legislature. (Photo by Howard Lestrud, ECM Online)

by Don Heinzman and Howard Lestrud
ECM Publishers

Saint Paul, MN -- Getting people to work will be the number one use of the $9.1 billion in federal stimulus money coming to Minnesota.

Members of the ECM Editorial Board paid a visit to the Minnesota Legislature at the State Capitol, St. Paul, last week and spoke with some of the state legislative leaders who are trying to put together reactions about how to utilize federal stimulus money. They are also looking at all methods of making cutbacks in order to balance the state budget.

The stimulus plan is expected to save or create 66,000 jobs at a time when Minnesota is facing a loss of jobs.

With $502 million coming for roads and highway, jobs could be created this summer.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said it's possible that shovel-ready construction projects using stimulus money could be under way in 120 days.  They will have to be decided by the Minnesota of Transportation.  Officials are unsure if the state government will have to match federal funds, possibly by selling bonds.

Sen. Donald Betzold, DFL-Fridley, chair of the State Government Budget Division, says road construction will be the easiest, such as completing work on Highway 610. 

The National Education Associaton is projecting $1.4 billion for education which could have an effect on the state budget for the next two years.  Of that amount,  $815 million could pass through regular channels into the K-12 education.

$700 million will be flexible
Pogemiller said $700 million will be flexible and another $500 million can be used for mandated and technical programs, such as $187.5 million for special education.

A total of $27.2 million will be available for new school construction and remodeling, which could result in 2,900 construction jobs.

The state is expected to receive $203 million in Medicaid which will help preserve jobs in the Health and Human Services, where costs are rising faster than other areas. This is good news because it means fewer people will lose their health care, Pogemiller said. He also said this will save some of the 10,600 jobs predicted to be lost if the state funding is cut, as predicted.

Pogemiller, however, made it clear that the federal money is one-time funding. "This is about new jobs and saving jobs. It is not about balancing our budget,” he said.

Pogemiller said he is concerned about a $2.5 billion structural problem and hinted he may be willing to cut the budget even more this session to prevent the budget shortfalls year after year.

He believes the public will be more receptive to budget cutting during these difficult economic times.  Some tough painful decisions will have to be made, he said, and no one will be taking a victory lap when this session is over. Raising revenues will be a last resort, he said. 

Meanwhile, Republican House Minority Leader Rep. Marty Seifert, R-Marshall,  said Friday that it's difficult to say the state won't accept the stimulus money.  He doubts that it will create many jobs, and cites that there's little evidence new jobs have been created with new gas tax money approved last year.

He said the state government can't solve its economic problem.  "Why not invest more in the private sector and grow private sector jobs?” he asked.

Grow more jobs
House Majority Leader Tony Sertich, DFL-Chisholm, also believes the federal stimulus money will be successful if it means growing more jobs. "We are more than willing to take our share for the State of Minnesota,”Rep. Sertich said.

Sertich said the stimulus will help act as a cushion or serve as a bridge. "It's here only for today and tomorrow, it goes away,” Sertich said. Sertich said he believes Gov. Pawlenty almost seems to be minimizing the state's budget problem. "We can kick the can down the road only so far and the problem is still there,” he said.

Leader Sertich said he believed the governor has a "creditability issue” on moving forward with a budget resolution.

The time is now, he says, to solve the problem and share sacrifice. He said the state must determine what it is willing to give up and willing to invest in.

State legislators are going out on the road later this week to talk to the general public about ways to close gaps in the budget. "We (the DFL) have been known to be compromisers but we also have our values,” he continued.

Sen. Betzold said many groups, for example, charter schools, disabled folks and others are coming to the Legislature and saying not to take their money away or hurt them in any way. "They come in and say, ‘I know you have a budget problem. . . but,'” Betzold said.

Betzold acknowledges the help coming from Washington and says another financial forecast is coming in early March and it indicates a hole will be dug deeper yet. Looking at projections, Sen. Betzold said the state is "quite accurate on spending” but it's the revenues that are more difficult to predict.

Three solutions possible
Three solutions are possible for the state's budget woes, raise taxes, cut spending or do a combination of both. Gov. Pawlenty has eliminated two of the three, he said. Betzold said the votes "are not there” to override another veto by the governor as happened last session with the transportation bill.

Sen. Betzold said Gov. Pawlenty is "shoving much of the responsibility” for solving state budget woes by putting it into the next biennium. Betzold, as chair of the state government budget division, oversees $630 million in funding for the state including the Legislature, constitutional officers, revenue and finance. "We could bulldoze the State Capitol, get rid of everything and we would still have the same problem,” Betzold remarked.

House Minority Leader Marty Seifert, R-Marshall, said he is nervous about the National Debt spiraling out of control.

"You can''t cut, shift, tax or gimmick your way out of this,” Betzold said. He pointed to education and human services as areas that will be affected by cuts. He also suggested the Legislature having a discussion on placing a sales tax on clothing. Food should not be taxed, he said. Heath care will also be a "huge” issue, said Betzold. "People are hurtin' right now,” he said. Betzold said bonding might be an answer to solving some of the problems.

"There's no budget researve left and we could have some challenges,” said Betzold. "I don't know how the governor can plan to hold his job again by pushing things off and hoping it gets better. It seems to me like ducking the problem.”

The hope is to sign a bill by May 18 and end the session, Betzold said. "If we had the answers today, we would pass the bill and go home,” he said.

Excited about New Minnesota Miracle
Rep. Mindy Greiling, DFL-Roseville, chair of the K-12 Finance Division, is excited about the proposed New Minnesota Miracle Bill. She says it will be fair for everyone and provide everyone with 10 percent of new funding.

The Miracle will provide property tax relief and will also restructure the aid formula. Greiling said education was priority No. 1 but was bumped to No. 2 because of the federal stimulus program.

Greiling said the main goal of the Miracle is to see to it that "all kids get a good education no matter their zip code.”

She said she is hopeful that the bill will get some healthy funding. She said she would like to see Miracle started with $500 million but said "even $50 million” would be a serious start.

Talking other education issues, Rep. Greiling said she is a Q-Comp supporter and also supports charter schools but says they are too loosely regulated. "We need to ratchet down on sponsors,” she said. Greiling said she liked choices in education and was anti-vouchers.

(Photos by Howard Lestrud, ECM Online)