$312 million in state spending cuts OK'd by Minn. House and Senate

Minnesota legislators are heading home for a weeklong break after taking action to erase about one-third of the state's nearly $1 billion budget deficit. The House and Senate passed a bill Monday that reduces state spending by $312 million.

The House took action first, passing the supplemental budget bill by a vote of 76-55. The bill includes spending cuts in 10 budget areas including higher education, public safety and state aid to cities and counties.

Rep. Lyndon Carlson, DFL-Crystal, said the bill reflects the Legislature's priorities.

"Making targeted cuts in these budget areas will allow us to protect education from cuts to the classroom, and reduce the amount that will be cut from health and human services," said Carlson. "We have been committed to taking early action to begin balancing this budget, and House File 1671 takes the first step."

Carlson said most of the cuts are similar to Gov. Pawlenty's budget proposal. But the House and Senate made a much smaller reduction in state aid to cities and counties than the governor suggested.

Republicans criticized DFL leaders for not offering a complete budget solution and largely ignoring their ideas.

Rep. Steve Gottwalt, R-St. Cloud, said his caucus wants permanent reductions in the size of government.

"This bill doesn't reflect our priorities. It doesn't reflect how we would cut government," said Gottwalt. "It doesn't reflect our reforms, the approaches that we would take to doing state government differently, so that we would get better outcomes for less money."

The Senate later passed the bill on a vote of 44-23, after hearing similar concerns. Sen. Geoff Michel, R-Edina, said all state budget priorities, such as K-12 education, should be laid out on the table first before taking any partial action.

"Why don't we have a K-12 target in front of us now, so we can judge whether this this little tiny budget makes any sense?" he asked.

Michel predicted the piecemeal approach would result in a budget train wreck later in the session. But Sen. Richard Cohen, DFL-St. Paul, disagreed. Cohen said the strategy for solving the current deficit is similar to how the Legislature processes budget bills every two years.

"I'm not quite sure what you're getting at, if we ought to change the system where we have one bill all the time, and vote on the entire budget all the time in one fell swoop?" said Cohen. "Or are we just doing it this year, but not next year? What about last year, what about two years ago, what about three years ago? That's where I'm a little confused."

Cohen said Gov. Pawlenty's office agreed with the spending cuts over the weekend, after House and Senate negotiators removed a proposed increase in a securities registration fee. Pawlenty's spokesman confirmed the deal, and said the governor will sign the bill.

Pawlenty is also poised to sign a package of tax incentives aimed at stimulating economic development. The House and Senate also passed the "jobs bill" before adjourning for the spring holiday break.

The bill creates a new angel investor tax credit for venture capitalists who help small businesses get off the ground. Other provisions deal with historic renovations, energy improvements and specific city projects, including a Mall of America expansion.

But several legislators objected to the bill's funding source -- a repeal of a motor fuel credit for low-income Minnesotans. Rep. Bobby Joe Champion, DFL- Minneapolis, said that tradeoff is wrong.

"What we are in fact saying to low-income people is, we can make a promise and now we're going to take it back," Said Champion. "And we're willing to take it back if it's going to help the wealthy and not help you."

DFL leaders say they'll get to work on the remaining solution to the state budget deficit in April. They say that solution won't be entirely clear until until they learn how much federal health care money is on its way to Minnesota.

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