DFLers tee off on Pawlenty’s supplemental budget

Proposed budget relies on money not yet appropriated by Congress

Finance Commissioner Tom Hanson had the unenviable task earlier this week of defending Gov. Tim Pawlenty’s plan to close the state’s $1.2 billion budget deficit.

The occasion was a Tuesday morning gathering of the bipartisan, 18-member Balanced Budget Subcommittee of the Legislative Commission on Planning and Fiscal Policy. The panel is charged with seeking solutions to Minnesota’s chronic budget problems - but the hearing primarily became an opportunity for Democrats to vent about Pawlenty‘s budget proposal.

Senate Majority Leader Larry Pogemiller repeatedly expressed incredulity at the Republican governor’s proposed budget solution, particularly a plan to rely on nearly $400 million in anticipated federal health-care funds. The problem with that proposal: The money has yet to be appropriated by Congress.

“I’ve been here 25 years and I’ve never seen a budget put together based on something the federal government might do,” Pogemiller said at the hearing.

At another point, the DFLer attempted to pin Hanson down on why the administration’s proposal didn’t rely entirely on cuts to resolve the deficit: “Were you unable, Commissioner, to come up with permanent cuts of $1.2 billion?” Pogemiller asked.

When Hanson largely ducked the question, Pogemiller interrupted him. “Commissioner, was this a hard question?” he asked pointedly. “Were you unable to come up with $1.2 billion in permanent cuts?”

Hanson’s diplomatic (if largely unhelpful) response: “We came up with the budget that you have before you.”

As evidenced by this hearing, the unveiling of Pawlenty’s plan to solve the state’s $1.2 billion budget deficit earlier this week has done little to clarify exactly how the fiscal standoff might conclude. Democratic legislative leaders largely scoffed at the governor’s proposal as dependent on budget gimmickry and potentially detrimental to a wide array of government services. The $1.2 billion deficit is equal to roughly 6 percent of the funds still to be spent in the current two-year budget cycle. The state is then expected to face a deficit of at least $5.4 billion in the following biennium.

The largest chunk of Pawlenty’s budget fix is the $387 million in anticipated federal health care dollars. The U.S. House of Representatives has passed a six-month extension of increases in Federal Medical Assistance Percentages (FMAP), which is used to calculate state Medicaid reimbursements. A similar measure was introduced in the Senate earlier this month, but has not yet been adopted.

“We’re hopeful that it would pass as part of a jobs package,” says Jess McIntosh, press secretary for U.S. Sen. Al Franken, who is a co-sponsor of the legislation. “But it is by no means a done deal. We’re pushing hard to see the FMAP funds extended. We know how critical they are to Minnesota’s economy, especially since the governor is counting on them.”

Even Pawlenty acknowledges that the health care funds aren’t certain to arrive in time to help with the current budget dilemma.

“If we don’t get this by the time the Legislature’s out, then I think we need to pull that piece back and reduce the state’s budget even further,” Pawlenty said in announcing the proposal. “That’s something we’re going to monitor very carefully.”

The remaining $800 million deficit would be eliminated primarily through cuts under Pawlenty’s plan. The governor proposes cutting $347 million from health care and human services programs. Most significantly, he wants to limit the enrollment of single adults in MinnesotaCare to people earning less than 75 percent of the federal poverty level. Currently, individuals earning up to 250 percent of the poverty threshold are eligible for the public health-insurance program. The change is expected to result in roughly 20,000 people being dropped from the health-care rolls.

In addition, Pawlenty proposes cutting Medicaid reimbursement rates for long-term care providers by 2.5 percent. The reduction would squeeze nursing homes, many of which are already struggling to survive financially. According to a 2008 report, 28 percent of Minnesota’s nursing homes run an operating deficit of at least 5 percent.

Pawlenty’s budget plan calls for cutting an additional $250 million from aid to Minnesota counties and cities. The proposed reductions come on top of $300 million in cuts to local government assistance unilaterally enacted by Pawlenty last year. Democrats charge that the additional cuts will cause reductions in core services such as police and fire departments.

“The governor is just flat out lying to Minnesotans when he says he’s protecting public safety,” said House Majority Leader Tony Sertich, DFL-Chisolm, in responding to the governor’s proposal. “You cannot protect public safety when you’re cutting police and fire and other important services.”

Pawlenty’s plan also includes roughly $50 million in higher education cuts and 6 percent reductions to most other government agencies and programs. The state’s court system, for instance, would lose nearly $15 million in funding, while the Combative Sports Commission - which regulates boxing and “ultimate fighting” - would see a $10,000 reduction.

Democrats have yet to offer their own solution for closing the deficit. They’ve indicated that a plan will be forthcoming shortly after the next budget forecast March 2. But at Tuesday’s gathering of the Legislative Commission on Fiscal and Policy Planning, Pogemiller gave some substantive clues as to what the DFL plan might look like.

He stated that Democrats will propose cutting at least as much as the governor from higher education and health care. But he also indicated that proposed cuts to local government assistance will be significantly smaller that what the administration has recommended.

But after the combative hearing, Republicans expressed frustration at the lack of a detailed budget alternative from the DFL legislative leadership. Rep. Mark Buesgens, R-Jordan, said that the legislative has not proven helpful in stemming the state’s budget problems.

“It simply seems to be a process whereby the leadership of the House and Senate can use the Finance commissioner as their little whipping boy,” Buesgens said. “Every meeting I’m asking, ‘Where’s our solution?’”

One Response to “DFLers tee off on Pawlenty’s supplemental budget”

1. Sonal Patney Says:
   February 19th, 2010 at 12:15 pm

   With all due respect, the Governor is approaching the budget all wrong. These are tough economic times, and cuts have to be made somewhere, but healthcare and LGA (particulary where core services such involving public safety) are affected. In current economic times, with the increasingly high rate of unemployment average folks and our senior citizens need healthcare programs like GAMC and healthcare overall. We also need to feel we are safe and our families and children are being raised in safe communities and neighborhoods. We should be looking to make cuts in areas where large amounts of aid is already being given, not in areas like LGA and GAMC. For example, corporate income tax rates can be flat rather than proposing an increase there. We can help business’ in other ways when they need the help - but between old folks needing GAMC and families having safety and giving more money to corporates - weighing thesse choices, where cuts are currently being proposed can certainly be avoided.