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ov. Tim Pawlenty announces Friday that he has eliminated a $426 million budget deficit, mostly by cutting state spending. Behind him is state Finance Commissioner Tom Hanson. Photo by Don Davis, St. Paul Capitol Bureau.

Budget '08: Pawlenty cuts local aid, programs

Morris,Minnesota 56267
Morris Sun Tribune
Budget '08: Pawlenty cuts local aid, programs
Morris Minnesota 607 Pacific Avenue 56267

By Don Davis

St. Paul Capitol Bureau

ST. PAUL - State budget cuts are under way. So is the anguish.

Minnesota Gov. Tim Pawlenty on Friday drained the state's budget reserve and chopped away at state payments to local governments, colleges, human services providers and state agencies in balancing the state budget.

The average Minnesotan should notice little change, Pawlenty said.

Major cuts included $110 million from payments due cities and counties, $73 million from human services programs, $40 million from colleges and $40 million from various state agencies.

"Families and businesses across the country are tightening their belts and government needs to do the same thing," Pawlenty said.

City officials were not happy with losing $66 million out of an expected $280 million payment on Dec. 26.

Pawlenty's cuts - officially known as "unallotment" - mean cities will receive 22 percent less money than they expected this month, said Tim Flaherty of Coalition of Greater Minnesota Cities.

"Having the rug pulled out from under cities at the last minute is upsetting, especially when we are willing to partner with the state to find a fair, long-term solution," added Wadena Mayor Wayne Wolden, the coalition's president.

Executive Director Jim Mulder of the Association of Minnesota Counties said his members will not complain.

"We understand we have to be part of the solution," Mulder said. "We have decided as an association that we are not going to spend a lot of time complaining. Nobody wants this ... but it is a reality. So let's spend our efforts finding solutions."

As Pawlenty cuts $271 million out of the budget, after using up the state's $155 million budget reserve, counties will lose $44 million of the $165 million they expected.

Aid to cities with 1,000 or fewer residents, exempting 505 of the state's 854 cities. Counties smaller than 5,000 also were spared.

Pawlenty - who under the constitution was required to make cuts -- balanced the state budget without affecting military, veterans, public safety and K-12 education programs.

The Republican governor was forced to make the cuts after a recent report indicating the state otherwise would end the fiscal year on June 30 with a $426 million deficit. Days after that report, State Economist predicted the deficit could grow up to $70 million more in the coming months, forcing another round of cuts.

Pawlenty would not say what he will do if more cuts are needed early in 2009.

The current budget problem is just part of the whole picture. In total, the state budget is nearly $5.3 billion unbalanced for the next two and a half years.

The Legislature and Pawlenty must together to balance the next two-year budget once lawmakers return to St. Paul on Jan. 6. It is expected to be about $32 billion.

Behind state aid to local governments, Friday's largest cut was in human services programs. But the Republican governor said few people should notice.

"As much as possible, we have worked to minimize the impact of these cuts by reducing accounts with surplus balances or excess funds that have not been spent or committed to projects," Pawlenty said.

Human services cuts include $28 million from the Medical Education Research Costs account, just a portion of the state's contributions, Pawlenty said.

"There are no good choices," said Rep. Tom Huntley, DFL-Duluth. "However, delaying medical education and research payments will threaten residency programs that are already in fiscal crisis, perhaps even forcing some to close."

Huntley, chairman of the House health finance committee, said programs that most need money are the ones being cut.

With local governments taking a hit, some city officials warned that public safety and other services would suffer.

Pawlenty said some cities, which he would not name, have offices -- such as those supporting human rights or the arts -- that duplicate state functions. Those types of offices should be cut before police and fire departments, he said.

The governor said the cuts to counties amount to less than 2 percent of their budgets and the average city cut would be about 3 percent.

He said such cuts are manageable.

However, Jim Miller of the League of Minnesota Cities said the cuts will affect some cities' public safety efforts.

"It really does vary by city," he said.

"It will be significant in some cases," Flaherty added.