Budget battle thickens

Gov. Tim Pawlenty on Tuesday released a revised 2010-2011 general fund budget that increases spending for K-12 education with the help of federal stimulus dollars.

Pawlenty unveiled hisfirst budget proposal in January. Earlier this month, Minnesota Management and Budget officials released a new economic forecast that projected a $4.6 billion shortfall. The hole would have been deeper without the one-time fix of $1.3 billion from the federal government for economic stimulus purposes.

In his revised budget, Pawlenty spends more money on K-12 education with the help of stimulus dollars. He wants to use $424 million of federal stabilization moneyto find savingsin the general fund andincrease education spendingfrom his original budget by $27.6 million.

Pawlenty is now proposing to spend $14.1 billion on K-12, which is a large chunk of the $32.6 billion in overall spending proposed. He said the stimulus money would help with reforms to pay teachers by performance rather than seniority.

“Our approach is a prioritized approach,” Pawlenty said at a state Capitol news conference.

Pawlenty’s health and human services budget has been altered due to strings thatare attached to the stimulus package. Pawlenty originally proposed to cut eligibility for adults without children on the MinnesotaCare program for low-income working people. The stimulus legislation requires the state to maintain eligibility for MinnesotaCare because it is paid for in part with federal money.

Pawlenty, however,makes changes to the general assistance medical care (GAMC) program, which is paid for by the state. He proposes to save $172 millionfor the state’s general fund by changing GAMC so that it pays for medical care in clinics in the appropriate instances rather than hospital emergency rooms.

Pawlenty also saves $8.2 million by having short-term offenders serve their sentences in state correctional facilities rather than county jails. Pawlenty also wants to exempt unemployment insurance benefits from the income tax for the first $2,400 received in 2009. That exemption would cost $28 million.

DFL legislative leaders assailed Pawlenty’s budget.

Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said increasing education funding while cutting health care isn’t a balanced approach to budgeting. He said Pawlenty’s proposal could cause hospitals to close.