Legislature passes budget, adjourns special session

The House and Senate have both passed a bill aimed at solving the state's nearly $3 billion budget deficit.

The House voted first, and approved the bill on a bipartisan vote of 97-32 with a few Democrats and Republicans voting no.

The Senate followed shortly afterward with a 52-14 vote in favor, about 11 hours after DFL legislative leaders and Republican Gov. Tim Pawlenty announced they had reached a deal.

Both houses then adjourned the special session, ending their work for the year.

Because the deadline for passing bills was midnight Sunday, a brief special session was needed so that staff and legislators could review the agreement.

Legislators ratified the $2.7 billion in spending cuts and school payment delays that Pawlenty made unilaterally in 2009 to balance the budget.

The biggest single chunk of the unallotments and the deal reached by the governor and lawmakers is a delay in payments to schools. The deal requires lawmakers to repay the school payment shift, which grew from $1.7 billion to $1.9 billion, in the next two-year budget cycle.

"We have negotiated hard and in good faith. We have reached a very good outcome," Pawlenty said.

Cheers were heard from the Senate chamber as the Senate adjourned after the vote.

"Let's get home!" said retiring Sen. Jim Vickerman, DFL-Tracy.

Lawmakers faced the difficult task of filling a nearly $3 billion budget deficit in just over a week. They thought they would only be trying to fill a $500 million shortfall, but then the state Supreme Court ruled that Pawlenty overreached when he bypassed the Legislature last summer and balanced the budget through unallotment.

DFL House Speaker Margaret Anderson Kelliher told reporters she was feeling good about the outcome.

"We have no cuts to nursing homes, no cuts to K-12 education. Our schools will be paid back," Kelliher said.

While the budget-balancing agreement also makes cuts to aid payments to local governments, Kelliher said Pawlenty had wanted much deeper cuts in that area, which she said could have driven up property taxes.

"We were able to hold that down to a very bare minimum this year and I think that's important when family budgets are really stressed. It's harder to take on that property tax burden," she said.

Kelliher also highlighted a compromise reached over health care. Democrats had pushed hard to leverage federal money by moving more low-income Minnesotans onto Medicaid coverage under the new federal health care law.

Democrats say that move makes sense because the state will get more than $7 from the federal government for every $1 it spends to expand Medicaid.

Republicans, especially in the House, tagged the plan "Obamacare," and they warned against embracing the program, given the federal government's fiscal problems.

The option will exist, but only if Pawlenty or his successor decide to apply. Kelliher, the DFL-endorsed candidate for governor, said she would likely use that option if elected. Pawlenty said he probably won't.

"The language requires some deliberation around some factors. So, I want to deliberate," Pawlenty said. "But I can tell you, I'm not a fan of the program."

Another piece of the budget deal beefed up a health care measure passed earlier in the session. An additional $10 million will help convince hospitals in greater Minnesota to participate in the retooled General Assistance Medical Care program for the state's poor.

Senate Rep. Minority Leader David Senjem of Rochester praised the final deal as a true bipartisan compromise that will move the state forward.

"We're in difficult times, there's no question about it," Senjem said. "But I think through these difficult times this group of people has come together and fashioned a bill that's going to allow us to go home, and I think we all look forward to that."

Many legislators from both parties shared Senjem's assessment. Sen. Dick Cohen, DFL-St. Paul, called it "the best of a bad situation."

Rep. Jeremy Kalin, DFL-North Branch, said the budget bill was a pretty good solution, even with its unpopular school payment shift.

"Given the governor's insistence on having absolutely no revenue on the table, I think we had to find a way to close the budget deficit and it does it," Kalin said. "The school shift is going to get paid back. We've done this before. It's not my preferred method. I don't think you'll find more than two or three House members on the floor here who would say it was their first choice."

Kalin won't have to deal with next year's promised pay back. He's among 21 incumbent legislators who aren't seeking re-election this fall. All 201 legislative seats are on the November ballot.

Still, the budget votes were far from unanimous. Several Republicans complained that the deal doesn't solve the state's long-term budget problems.

"I think we could do much better. I'd rather be here for several weeks to work out a better product," said Rep. Jim Abeler, R-Anoka.

But House Majority Leader Tony Sertich echoed Senjem, noting that it's difficult to satisfy everyone when the state is in such dire financial straits.

"In these tough economic times, Minnesotans know that we have to make some very difficult decisions to move the state forward, to have a balanced budget and to invest in our core values. And that's what we're doing," he said.

Pawlenty, who is not running for re-election this year, reflected on his eight years in office during a news conference Monday after the House and Senate had adjourned. He said he's proud of the work he's done over the years to help reduce government spending.

"You know, this is a very liberal state. It's one of the most liberal states in the country," he said. "We charted a different and better course ... a more contemporary course for the state of Minnesota."

(MPR reporter Elizabeth Dunbar contributed to this report.)

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