Pawlenty, lawmakers meeting again on budget

DFL and Republican legislative leaders were meeting with Gov. Tim Pawlenty for a second time Tuesday to discuss possible solutions to the state's nearly $3 billion budget deficit.

Pawlenty met with leaders for about an hour Tuesday afternoon, but lawmakers emerged with no deal. They agreed to meet again Tuesday evening, but it was not clear how long it would last.

After the first meeting, DFL House Speaker Margaret Anderson Kelliher said Pawlenty would allow Republican legislative leaders to work with her and DFL Senate Majority Leader Larry Pogemiller on a solution, but she said he offered no new ideas.

Pogemiller planned to speak with Republican Senate Minority Leader David Senjem to see if there are additional spending cuts that can be made that Republicans would support.

Senjem said the "wheels of government are still turning," and that Republicans were willing to work with DFLers to find $400 million in cuts -- the money DFL leaders had wanted to generate through new income tax revenue.

The closed-door negotiations came after Pawlenty vetoed a DFL budget-balancing plan that included tax increases for wealthy Minnesotans, forcing lawmakers to go back to the drawing board on a solution to a nearly $3 billion budget deficit.

Pawlenty signed a veto letter the morning after the House and Senate narrowly approved the measure, saying it was "nonsensical" to increase taxes on job providers. He also said it doesn't do enough to address a projected nearly $5 billion deficit for the 2012-2013 budget cycle.

"I look forward to working with you on an appropriate budget solution that does not raise taxes on Minnesotans, and significantly reduces the budget deficit in this budget cycle and the next one," Pawlenty wrote.

In a letter in response to Pawlenty's veto, DFL leaders accused the Republican governor of continuing to "lambaste lawmakers when we present you a workable, balanced budget solution."

"We had hoped that perhaps the moment had arrived to put aside your rigid ideology and political concerns," they wrote.

With the Republican governor opposing any tax increases, the only way DFL leaders will see their tax bill go through is if they find enough votes for an override. That prospect seemed unlikely, as some Democrats -- including those in competitive districts -- joined Republicans in rejecting the tax hikes.

With the veto, DFL leaders said they are waiting for the governor to propose something other than his budget plan, which they said doesn't have enough support in the Legislature.

"It's a matter of getting our job done, and not worrying about who gets credit or who gets the 'win.'"

"The problem with the governor's position is he says no to everything that isn't his way, and the problem with that is he doesn't have enough support in the Legislature to pass his own plan," said House Majority Leader Tony Sertich, DFL-Chisholm. "The ball's really in the governor's court right now."

Kelliher, DFL-Minneapolis, said in a written statement that Pawlenty "can't keep pushing this problem away with his veto pen."

"This is the time for him to negotiate. We will not compromise on our kids and schools, care for the elderly and disabled and the overall safety of our communities," she said.

Earlier Tuesday, during a conference call, Kelliher said DFL legislative leaders are willing to entertain any ideas Republicans have to solve the budget crisis.

"They certainly are in a place where they have a very strong hand right now," she said. "If they came forward and said we're interested in some form of revenue, we would probably be interested in talking to them."

The state was dealing with a $536 million budget deficit until last week, when the Minnesota Supreme Court struck down Pawlenty's unallotment last year of a nutrition program for low-income Minnesotans. While the decision applies only to that program, Pawlenty's $2.7 billion in cuts through unallotment could also be challenged in court.

Lawmakers and Pawlenty want that amount of money to be accounted for in the current two-year budget through legislative action, but they have different ideas about how it should be done.

Republicans opposed the DFL budget plan for two main reasons: It would have raised more than $400 million in new taxes and it didn't make permanent cuts aimed at reducing the size of state government.

Zellers, R-Maple Grove, said members of his caucus would back a move to ratify Pawlenty's unallotment cuts, which the state Supreme Court ruled were made illegally. But he said those cuts must be made permanent, something DFLers have resisted.

With less than a week left before their constitutionally mandated adjournment, Zellers said DFL legislators need to think about solving the budget deficit rather than being seen as the winner or loser in the political game with the governor.

"I don't think it's any more of him winning or them losing or them winning today but losing tomorrow," Zellers said. "It's a matter of getting our job done, and not worrying about who gets credit or who gets the 'win.'"

But clearly there's a lot at stake politically. It's an election year, and Pawlenty isn't running for re-election.

Kelliher, who has a key role in budget negotiations as House Speaker, is the DFL-endorsed candidate for governor. Although he hasn't announced any plans, many believe Pawlenty is a likely presidential contender in 2012.

DFL leaders have said the fact that Pawlenty may have greater ambitions has contributed to his stubbornness. But they said he must work with them.

"Our state's in tough fiscal shape right now. He's going to have to come to the table and put his future plans on hold and do what's best for the state of Minnesota," Sertich said.

(MPR reporters Tim Pugmire, Tom Scheck and Tim Nelson contributed to this report.)

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