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Don Davis/State Capitol Bureau Gov. Tim Pawlenty said late Sunday that he is happy to have reached a budget-balancing deal that does not raise taxes. With him are Senate Minority Leader Dave Senjem and House Minority Leader Kurt Zellers.

Update: Legislators end with a balanced budget

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politics Worthington, 56187
Worthington Minnesota 300 11th Street / P.O. Box 639 56187

9:30 p.m. Update

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ST. PAUL -- Minnesota legislators knew they were in for a tough year when they arrived at the Capitol on Feb. 4.

After three and a half months, they needed another 11 hours to finish the hardest job, balancing the state's $3 billion budget deficit. They did that work by delaying $1.9 billion in school payments, to be repaid in the next several years, and forcing nearly $1 billion in spending cuts, mostly in health and human services programs.

The House voted for the bill 97-32 and the Senate 52-14 before adjourning just before 11 a.m. Monday.

Soon after the votes, lawmakers headed home for the year after a few days of intense budget-balancing negotiations.

At the session's start, the budget deficit was at least $1.2 billion, the state Supreme Court was considering whether last summer's spending cuts were legal and gubernatorial politics threatened to disrupt legislative activity with candidates sprinkled throughout the Legislature.

At the session's end, little mattered other than the budget deficit, which had grown to nearly $3 billion due, in part, to the high court throwing out $2.5 billion of Pawlenty's unilateral cuts and an added $500 million deficit after last summer's cuts.

Republicans like Pawlenty were happy with the final budget-balancing bill.

"We were able to resolve the $3 billion budget deficit without raising taxes," Pawlenty said. "We've reached a good outcome for the people of Minnesota."

Leaders of both parties said that given the economy they were satisfied with the result.

House Majority Leader Tony Sertich, DFL-Chisholm, said it was a victory to preserve nursing home and public school funding this year.

"One of the things we talked about is not doing any harm" to businesses and families, Minority Leader Kurt Zellers, R-Maple Grove, said. "That's hard to do when you have a $3 billion deficit."

The agreement requires that school borrowing be paid back in the next two-year budget, Pawlenty said, but Sertich said it more likely will happen over several years.

Negotiations for several days centered on changes Democrats wanted to make in health care programs for the poor and reimbursements to rural hospitals. The logjam broke Sunday afternoon when Pawlenty suggested putting off those controversial decisions and Democrats countered with a plan to make expanding a specific health care program optional.

The exchange of offers eventually resulted in an agreement, but with just 20 minutes left before the constitutional deadline for passing bills, there was not enough time. So with an agreement in hand, Pawlenty called a special session to begin at 12:01 a.m. Monday for the single purpose of passing the budget-balancing bill.

The bill:

- Delays $1.9 billion of state payments to schools from the current two-year budget into future budgets.

l Cuts nearly $1 billion in spending, a figure that includes some other delayed payments.

- Allows Pawlenty or the new governor who takes office in January to take part in an expanded Medical Assistance program with the state spending $188 million to leverage $1.4 billion from Washington.

- Puts $10 million into the General Assistance Medical Care program for the poor; the money will allow 17 hospitals outside the Twin Cities to provide care, while now just four Twin Cities hospitals are in the program.

- Requires $408 million that Congress may appropriate for Minnesota to be used to pay the state's bills.

- Preserves funding for military, public safety, veterans, corrections and nursing homes.

Aids to local governments will be cut more than $300 million because, Pawlenty said, it is one of the few places that the federal government allows the state to cut.

Among the biggest cuts is a $100 million reduction in higher education spending. Also, the renters' refund will be reduced $52 million and $166 million of sales and corporate tax refunds will be delayed.

Health and human services programs will be cut $85 million, but nursing homes and long-term care facilities are spared reductions and mental health program cuts are minimized, Rep. Tom Huntley, DFL-Duluth, said.

As legislators waited nine hours for the budget bill to be ready, many napped in their chairs, offices or benches in Capitol hallways.

In a House Republican briefing on the budget measure, Rep. Bud Nornes, R-Fergus Falls, briefly passed out, fell and hit his head. He was conscious when an ambulance took him to nearby Regions Hospital, where he was examined but returned to the Capitol in time to vote on the budget bill. He said he was fine.

Monday's special session followed a regular session that centered on money.

Early on, lawmakers passed a nearly $1 billion public works funding plan, known as a bonding bill. Pawlenty vetoed $313 million, saying the measure was too pricey.

Democrats said the bonding bill would produce thousands of jobs. They said the same for another bill that would provide tax breaks for people who invest in businesses.

But while Democrats who run the Legislature claimed success in some areas, they failed on other issues, at least in Republican views.

Pawlenty said he was disappointed that the Legislature failed to approve education reforms, including allowing mid-career professionals to easily become teachers and evaluating teachers on student performance. A Senate bill would have done those, but a House bill fell short of Pawlenty's wishes.

Lack of education reform may have doomed Minnesota's chances of getting $175 million more federal aid because that was based in a large part on reforms. Pawlenty said late Sunday that he had not decided whether to apply for a second round of the Race to the Top education funding.

A much-discussed proposal that failed was a new Vikings football stadium. It won a committee vote, but in the face of severe financial problems it never had a real chance.

Davis reports for Forum Communications Co., which owns the Daily Globe.

10:55 a.m. Update

ST. PAUL -- It took more than 10 extra hours, but Minnesota legislators finally finished their most important job of 2010 and went home for the year this morning.

The Housed voted 97-32 and the Senate 52-14 for a bill that covered a nearly $3 billion state budget deficit. The final vote came at 10:30 a.m. today and ended a brief special session called because lawmakers could not meet their midnight deadline.

The measure in a large part follows budget cuts Gov. Tim Pawlenty made last summer, an action the Minnesota Supreme court says was illegal.

The bill:

-- Delays $1.9 billion of state payments to schools from the current two-year budget into future budgets.

-- Cuts nearly $1 billion in spending, a figure that includes some delayed payments.

-- Allows Pawlenty or the new governor who takes office in January to take part in an expanded Medical Assistance program to provide health care to poor Minnesotans with the state spending $188 million to leverage $1.4 billion from Washington.

-- Requires that $408 million that Congress may appropriate for Minnesota to be used to pay the state's bills.

-- Preserves funding for military, public safety, veterans, corrections and nursing homes.

Aids to local governments will be cut more than $300 million because, Pawlenty said, it is one of the few places that the federal government allows the state to cut.

Among the biggest cuts is a $100 million reduction in higher education spending. Also, the renters' refund will be reduced $52 million and $166 million of sales and corporate tax refunds will be delayed.

Health and human services programs will be cut $85 million.

Legislators accepted Pawlenty's wish to not cut most state agencies any more than in earlier cuts. Lawmakers had planned to cut budgets a half percent, for a $14 million savings.

The bill was crafted late Sunday and early today from a measure lawmakers passed a day earlier. But that original bill did not meet Pawlenty's requirements. A series of negotiating sessions followed until a deal was reached at about 11:40 p.m. Sunday.

That was too late to write the bill, so the regular legislative session adjourned by midnight and a special session convened soon afterwards. Most of the special session was spent waiting for the bill to be completed and prepared for debate in the House and Senate.

Once the agreement was reached, several days of partisan bickering ended.

"We have reached a bipartisan agreement to bring the legislative session to a productive and good conclusion," Pawlenty said.

It was a good outcome, "considering the economic shape we are in," House Majority Leader Tony Sertich, DFL-Chisholm, said.

The special session hit a bump in the road this morning when Democrats began debating an education-related bill that was not part of the special session deal with Pawlenty.

Republicans held off the effort to debate the bill on an 85-43 vote, with 90 needed to open debate.

"This is absolutely wrong to try to jam us at this time," Rep. Denny McNamara, R-Hastings, said. "A deal is a deal, folks."

While in a House Republican briefing on the budget measure, Rep. Bud Nornes, R-Fergus Falls, briefly passed out, fell and hit his head. He was conscious when an ambulance took him to nearby Regions Hospital, where he was examined but returned to the Capitol in time to vote on the budget bill.

Davis reports for Forum Communications Co.

Update: Legislature continues to break deadlines

9:30 a.m. Update

ST. PAUL -- Minnesota lawmakers missed another deadline when the sun came up this morning, the second in just a few hours.

And a second bill came up during what was supposed to be a single-bill session as the hours drifted by.

House Republicans met with Gov. Tim Pawlenty at length this morning, delaying the start of debate. The House began meeting at 9:30 a.m., long after the sunrise when legislative leaders said they would be completed.

Legislators and the governor could not balance the state budget by midnight, forcing the Legislature into what was supposed to be a brief special session.

Democratic leaders and Republican Pawlenty agreed to begin the special session at 12:01 a.m. today, promising passage of a budget-balancing measure by sunrise. The sun was well up and the budget bill still was not ready.

Senators briefly debated an education bill that Pawlenty's spokesman, Brian McClung, said was not part of the agreed-to special session rules. House Republicans planned to prevent the bill from being debated there, a GOP House spokesman said.

Also today, while in a House Republican briefing on the budget measure, Rep. Bud Nornes, R-Fergus Falls, briefly passed out, fell and hit his head. He was conscious when an ambulance took him to nearby Regions Hospital, where he was examined but returned to the Capitol in time to vote on the budget bill.

Pawlenty and legislative leaders said late Sunday that only the budget-balancing bill would be debated.

An agreement about how to fill a $3 billion deficit was announced at 11:40 p.m. Sunday, 20 minutes before the constitutional deadline to pass bills.

The deal gives Pawlenty most of what he sought in the budget bill, including no increased taxes.

"We have reached a bipartisan agreement to bring the legislative session to a productive and good conclusion," Pawlenty said.

"We were able to resolve the $3 billion budget deficit without raising taxes," Pawlenty added. "We've reached a good outcome for the people of Minnesota."

The agreement combines spending cuts with a $1.9 billion delay in state payments to schools. It requires that school borrowing be paid back in the next biennium, Pawlenty said.

Had the agreement not happened, "the state would have been in a very precarious situation," Pawlenty said.

The agreement follows a series of meetings the governor hosted with legislative leaders throughout Sunday night, mostly about health-care provisions in the bill.

"We have an agreement with the governor," House Majority Leader Tony Sertich, DFL-Chisholm, told his colleagues just before midnight. "It looks essentially like the last bill we went to the governor at 6 o'clock this morning, with some modifications."

The deal allows Pawlenty or the governor who takes office in January to join an expanded Medical Assistance Program offered by the federal government. Pawlenty opposes it, but Democrats like the plan to cover thousands of poor Minnesotans.

The lone bill to be considered in the special session also would continue the existing General Assistance Medical Care program, also for the poor,

The House adjourned it regular 2010 session for the year at 11:55 p.m., expecting to return six minutes later. The Senate adjourned at midnight.

The final regular legislative day began Sunday afternoon with House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, weeping from her perch high above the front of the House chamber. She announced months ago that she is retiring, even if her bid for the governor's office fails. She received a standing ovation from her colleagues.

The House and Senate both gave time to retiring members to deliver speeches. In some cases, lawmakers were making their first public announcements that they would not seek re-election.

Even while the speeches were being delivered, work went on behind the scenes to balance the budget in a hurried effort to end the session.

As progress was being reported, so was continued dispute. Pawlenty spokesman Brian McClung talked to reporters with slightly more than three hours left in the session, saying Democrats continued to seek surcharges on health programs even after they promised to drop the request in light of Pawlenty's objections.

And, McClung said, Democrats wanted two budget bills while the governor wanted everything wrapped up into one.

Surcharges were dropped and it was decided to use only one bill.

Budget problems were known when lawmakers arrived in St. Paul in early February, but made worse a couple of weeks ago when the state Supreme Court ruled that Pawlenty's spending cuts from last summer were illegal. That left the $3 billion budget problem, which if not solved could create financial havoc for the state.

The governor late Sunday afternoon proposed cutting spending to help balance the budget, but setting aside controversial proposed health-program changes.

Democratic leaders, who control the Legislature, quickly shot a counteroffer back to Pawlenty, agreeing with much of what he suggested. But the health-care provision that Pawlenty wanted to drop would be left available to the new governor who takes office in January.

If the budget was not balanced, the state could run out of money to pay its bills this summer and it would become difficult or impossible to sell bonds to finance public works projects around Minnesota.

The biggest stumbling block was a Democratic proposal to expand health programs for the poor by spending some state money to bring in $1.4 billion federal money. That would be dropped under Pawlenty's plan, but left available under the DFL counteroffer.

Pawlenty and his Republican legislative colleagues strongly objected to a trio of surcharges that Democrats wanted to help fund the expanded programs. Those surcharges would not be pursued under the governor's plan, and Pawlenty said he would agree to not making some health and humans services cuts he wanted.

"I think this is a pathway forward," Pawlenty told reporters shortly after he gave legislative leaders his proposal.

House Minority Leader Kurt Zellers, R-Maple Grove, said the main point of contention in recent days has been health issues.

"Just get back to balancing the budget," he urged.

Pawlenty said his offer was designed to get beyond talking about the same things that were going nowhere.

"We have been talking for days about the same two or three narrow issues," he said. "We are at a point where we have to decide one thing or another."

Sertich said that part of his party's plan would keep General Assistance Medical Care, a health program for the poor, would remain pretty much the same as now but with additional money made available to rural hospitals to take part in the program.

The House leader said he is optimistic about reaching a deal.

"At some point, the governor is going to have to say 'yes' to something," he said.

Pawlenty said there are things he had to give up besides deeper health program cuts. For instance, he said, education reforms he badly wanted are not likely now.

Andrew Tellijohn of the State Capitol Bureau contributed to this story. Tellijohn and Davis report for Forum Communications Co.

Legislature starts brief special session

Don Davis, Capitol Bureau

ST. PAUL -- Minnesota lawmakers missed another deadline when the sun came up this morning, the second in just a few hours.

Legislators and the governor could not balance the state budget by midnight, forcing the Legislature into what was supposed to be a brief special session.

Democratic leaders and Republican Gov. Tim Pawlenty agreed to begin the special session at 12:01 a.m. today, promising passage of a budget-balancing measure by sunrise. The sun was well up and the budget bill still was not ready, but debate was expected to begin by 8 a.m.

An agreement about how to fill a $3 billion deficit was announced at 11:40 p.m. Sunday, 20 minutes before the constitutional deadline to pass bills.

The deal gives Pawlenty most of what he sought in the budget bill, including no increased taxes.

"We have reached a bipartisan agreement to bring the legislative session to a productive and good conclusion," Pawlenty said.

"We were able to resolve the $3 billion budget deficit without raising taxes," Pawlenty added. "We've reached a good outcome for the people of Minnesota."

The governor said the deal was that just one item will be on the special session's agenda.

The agreement combines spending cuts with a $1.9 billion delay in state payments to schools. It requires that school borrowing be paid back in the next biennium, Pawlenty said.

Had the agreement not happened, "the state would have been in a very precarious situation," Pawlenty said.

The agreement follows a series of meetings the governor hosted with legislative leaders throughout Sunday night, mostly about health-care provisions in the bill.

"We have an agreement with the governor," House Majority Leader Tony Sertich, DFL-Chisholm, told his colleagues just before midnight. "It looks essentially like the last bill we went to the governor at 6 o'clock this morning, with some modifications."

The deal allows Pawlenty or the governor who takes office in January to join an expanded Medical Assistance Program offered by the federal government. Pawlenty opposes it, but Democrats like the plan to cover thousands of poor Minnesotans.

The lone bill to be considered in the special session also would continue the existing General Assistance Medical Care program, also for the poor,

The House adjourned it regular 2010 session for the year at 11:55 p.m., expecting to return six minutes later. The Senate adjourned at midnight.

The final regular legislative day began Sunday afternoon with House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, weeping from her perch high above the front of the House chamber. She announced months ago that she is retiring, even if her bid for the governor's office fails. She received a standing ovation from her colleagues.

The House and Senate both gave time to retiring members to deliver speeches. In some cases, lawmakers were making their first public announcements that they would not seek re-election.

Even while the speeches were being delivered, work went on behind the scenes to balance the budget in a hurried effort to end the session.

As progress was being reported, so was continued dispute. Pawlenty spokesman Brian McClung talked to reporters with slightly more than three hours left in the session, saying Democrats continued to seek surcharges on health programs even after they promised to drop the request in light of Pawlenty's objections.

And, McClung said, Democrats wanted two budget bills while the governor wanted everything wrapped up into one.

Surcharges were dropped and it was decided to use only one bill.

Budget problems were known when lawmakers arrived in St. Paul in early February, but made worse a couple of weeks ago when the state Supreme Court ruled that Pawlenty's spending cuts from last summer were illegal. That left the $3 billion budget problem, which if not solved could create financial havoc for the state.

The governor late Sunday afternoon proposed cutting spending to help balance the budget, but setting aside controversial proposed health-program changes.

Democratic leaders, who control the Legislature, quickly shot a counteroffer back to Pawlenty, agreeing with much of what he suggested. But the health-care provision that Pawlenty wanted to drop would be left available to the new governor who takes office in January.

If the budget was not balanced, the state could run out of money to pay its bills this summer and it would become difficult or impossible to sell bonds to finance public works projects around Minnesota.

The biggest stumbling block was a Democratic proposal to expand health programs for the poor by spending some state money to bring in $1.4 billion federal money. That would be dropped under Pawlenty's plan, but left available under the DFL counteroffer.

Pawlenty and his Republican legislative colleagues strongly objected to a trio of surcharges that Democrats wanted to help fund the expanded programs. Those surcharges would not be pursued under the governor's plan, and Pawlenty said he would agree to not making some health and humans services cuts he wanted.

"I think this is a pathway forward," Pawlenty told reporters shortly after he gave legislative leaders his proposal.

House Minority Leader Kurt Zellers, R-Maple Grove, said the main point of contention in recent days has been health issues.

"Just get back to balancing the budget," he urged.

Pawlenty said his offer was designed to get beyond talking about the same things that were going nowhere.

"We have been talking for days about the same two or three narrow issues," he said. "We are at a point where we have to decide one thing or another."

Sertich said that part of his party's plan would keep General Assistance Medical Care, a health program for the poor, would remain pretty much the same as now but with additional money made available to rural hospitals to take part in the program.

The House leader said he is optimistic about reaching a deal.

"At some point, the governor is going to have to say 'yes' to something," he said.

Pawlenty said there are things he had to give up besides deeper health program cuts. For instance, he said, education reforms he badly wanted are not likely now.

Andrew Tellijohn of the State Capitol Bureau contributed to this story. Tellijohn and Davis report for Forum Communications Co.

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