Budget talks edge forward as end of session nears

After several closed-door meetings with Gov. Tim Pawlenty at the Capitol on Tuesday, Democrats and Republicans will continue negotiations today to solve the state's nearly $3 billion budget problem.

On Tuesday, Gov. Pawlenty vetoed a DFL budget balancing plan that would have cut spending and raised taxes. The governor and Republicans say they won't support a tax increase or any other new revenue. Democrats in the Legislature continue to insist that the state's budget problem can't be fixed with cuts alone.

The debate has caused a stalemate and has forced DFL Senate Majority Leader Larry Pogemiller to challenge Pawlenty and Republicans to find the solution.

"I don't believe you can do it with just cuts. But if they can, they should show us that," Pogemiller said.

On Wednesday, DFL House Speaker Margaret Anderson Kelliher said at least two Republicans have approached her caucus with ideas for new taxes on alcohol. It was unclear whether such a plan would have enough votes to override Pawlenty, who has opposed any new taxes.

"I don't know if alcohol, an alcohol tax can get an override vote in the Minnesota House or the Minnesota Senate, but at least two (GOP) members have indicated different versions of an alcohol tax that they might be interested in," Kelliher said.

A veto-proof measure would still require a unanimous vote by House DFLers, and 17 of them voted against the income tax plan that Pawlenty rejected. Three Republicans would have to join all DFLers in the House for an override to happen.

Meanwhile, Republican leaders have started to stitch together an idea that could meet Pogemiller's challenge of finding solving the budget deficit with cuts.

Republican House Minority Leader Kurt Zellers said he wants the House and Senate to vote on a bill that makes Pawlenty's solo budget cuts permanent. Zellers said he offered that concept to Democrats with the hopes that any additional savings help pay back a $1.7 billion school payment delay.

"It's the same as what we are talking about all day. It's the permanent vs. the temporary unallotments and revenue," Zellers said. "We're trying to find a way to do it without having taxes on the table or fees or gambling or what not. If we can agree to an early idea, we maybe could get done with this by Thursday or Friday."

But Kelliher said a revenue plan that can find three Republicans to support it has a better chance than a Republican-crafted plan.

"It is probably easier to find three Republicans to vote for something they helped craft than find 19 Democrats to come and vote for something that the Republican minority crafts," she said. "Hopefully people are going to start to figure out the math differential on that and how much easier it is to get three than 19."

If it sounds like inside baseball, it is. But the discussion could affect how much is spent on schools, health and human service programs and aid to local governments.

Last week's Minnesota Supreme Court ruling has put funding for all of those programs in jeopardy. The court said that Pawlenty crossed the separation of powers line when he unilaterally cut $2.7 billion in spending in July.

But Zellers' offer to make Pawlenty's sole budget cuts permanent means Republicans will have to put up more votes for the measure. The House and Senate overwhelmingly rejected efforts to pass Pawlenty's spending cuts into law to overcome the court's objections. Despite those votes, Republican Senate Minority Leader David Senjem said he thinks lawmakers will be forced to make tough budget choices before Monday's deadline to adjourn.

"We all know that these are difficult times and we're going to have to make difficult cuts," Senjem said. "Cuts, frankly, that none of us want to make, but as you look where we are, I'm convinced that we're going to have to make them. It's not going to be easy.

"We're going to have to get some help certainly from the other side but we're going to try to put something together that we can all agree on," he said.

Kelliher said the Republican proposal doesn't fix the entire budget problem.

"It's like a video game, where we get to level 1, and it unlocks level 2 and you're going tell us a little more about your ideas, and then level 3 and you're going to tell us a little more about your ideas," Kelliher said.

Kelliher also said she's concerned that it could still take up to seven years to pay back the school payment delay.

Pawlenty hasn't spoken to reporters since last week, but his spokesman Brian McClung, said past governors and legislatures have done such shifts and it should be part of the budget fix now. But Democrats say without a mechanism to pay it back, the payment delay is actually a deep cut in education funding.

Gov. Pawlenty and lawmakers have until midnight Sunday to finish their work.

(MPR reporter Tim Nelson contributed to this report.)

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