Column: Deal or no deal
ST. PAUL -- As the legislative calendar days tick away at the State Capitol, the question being asked by all those congregating under the dome is ... will there be a budget deal?
The buzz grows louder with each passing day about the prospects of Gov. Pawlenty reaching an agreement on the $1 billion budget deficit with the DFL leadership before the scheduled session adjournment in mid-May. Two months of the legislative session have passed with only two significant items having been resolved. The first issue being the protracted tussle over the capital projects legislation, better known as the bonding bill. The Legislature passed two different versions of billion dollar plus state construction spending, only to have Gov. Pawlenty whack the final version sent to him by one-third, or more than $330 million worth of what would have been new debt. This certainly doesn't bode will for a harmonious end of session budget deal.
The second major legislative hurdle was accomplished with an agreement on funding for a scaled back and reformed General Assistance Medical Care (GAMC) program. The funding for this program was first vetoed the governor at the end of the 2009 session, and the Legislature passed a funding fix earlier in the session only to have the Governor veto that legislation as well. The new GAMC legislation, which was negotiated with the Administration, appears to be headed toward the finish line. But as has been seen with other negotiated "deals," don't count it as done until it is signed into law.
With these two major issues presumably settled, work on the billion dollar budget shortfall will become the focus. From an optimistic viewpoint, progress is being made on this front. Both the House and Senate passed differing versions of a budget reduction plan that would trim approximately one-third of the billion dollar deficit or a little more than $300 million. While this may signal a good start toward balancing the current 2010-11 budget, there were two major areas of the budget left in limbo by that budget debate. They were Health and Human Services spending and K-12 education funding. These two spending areas account for approximately 70 percent of total state spending -- about 30 and 40 percent, respectively. With these two areas unresolved, major decisions still have to be made.
Even if Gov. Pawlenty agrees with the $300 million in spending reductions called for in the first legislative budget bill, it still requires about $700 million in additional state spending reductions or tax increases.
Based on what happened last year, the pessimistic view point is that the legislators will leave without providing a budget solution and the governor will once again be left to resolve the budget on his own through the unallotment process. Some legislators find this option to be the least attractive because of the uncertainty about where the governor would cut. Other legislators sort of like this missing-in-action approach because it allows them to point the finger at the governor for what they believe are rather unpalatable spending cuts. In other words, let him do the dirty work.
In this difficult and trying budget balancing act, there are two very important wild cards. The first wild card is federal money. Specifically, getting answers to the questions of how much federal money will Minnesota receive and when will we receive it? Gov. Pawlenty in his proposal to close the budget gap included $387 million in additional federal health care dollars. These dollars are included in a yet-to-be-passed federal jobs bill. While Democrats criticized Pawlenty for including this yet to be authorized federal money, you can bet they too are hoping their cronies in D.C. will come through with the cash. Even with the federal money, there will still be some budget balancing to complete.
The second wild card in the budget reconciliation game is in the hands of the Minnesota State Supreme Court. The Court will likely rule in April on a case involving Gov. Pawlenty's "unallotments" last summer of $2.7 billion from the state budget. The governor made the reductions in order to balance the budget after the legislature adjourned. His authority to make the unallotments was challenged and now will be decided by the state's highest court.
Like the game show "Deal or No Deal," the pressure is mounting and the clock is ticking. Will there be a budget deal before the Legislature adjourns, or will there be another round of unallotments by the governor? One other possibility is an extended special session with lawmakers and the governor battling it out over a proposed tax increase versus spending cuts. In November, all 201 legislative seats are on the ballot. As of now, it's anyone's guess as to who gains or loses an election advantage with a "Deal or No Deal."
Phil Krinkie is a former Republican state representative from Lino Lakes and president of the Taxpayers League of Minnesota.