Pawlenty may delay school payments to pay state's bills

The Pawlenty administration says it may withhold payments to schools to pay the state's bills.

Finance officials told lawmakers Wednesday they are taking steps to avoid short-term borrowing through June.

State Budget Director Jim Schowalter said $870 million has already been borrowed from other state funds to meet cash flow needs. Now, officials are looking to delay payments to colleges and universities and K-12 schools.

DFL Represenative Lynn Carlson of Crystal said the state would not be in as big a fiscal mess if Pawlenty would have signed a tax bill to increase taxes.

"It just shows the magnitude of the problem and the ill advised veto. In my opinion, from last session when we did have additional revenue that should have been available, that would have helped alleviate some of these problems that are now surfacing," Carlson said.

Schowalter said the payment delays to school districts would be temporary, unlike a similar accounting shift Pawlenty used to balance the budget in July.

"Unlike the aid payment shift, which reduces the total amount a school would receive in a particular year to be settled up in the following year," Schowalter said.

"In this case, we're talking about the timing of those payments being a couple of months later than is currently planned."

Schowalter said delayed payments would target school districts that have large reserves. He said the state may delay sales and corporate income tax refunds to help meet cash flow needs.