Next budget steps remain in limbo as Pawlenty vetoes bill

Talk about it

ST. PAUL — Republican lawmakers have complained for months that Democrats in control do not listen to their ideas, but now that five days remain in the Minnesota legislative session they are being asked to help with the unpopular job of finding more places to cut state spending.

It is a job some Republicans hesitate accepting, fearing political ramifications of deep cuts as GOP Gov. Tim Pawlenty and lawmakers look to fill a nearly $3 billion budget deficit.

On Tuesday night, it appeared the favored solution to balance the budget was to rely more heavily on cuts than Democrats wanted.

Pawlenty and legislative leaders negotiated into the night Tuesday after the governor earlier vetoed a Democratic-Farmer-Laborite bill that would have increased income taxes. At an afternoon meeting, legislative leaders and Pawlenty agreed to seek more spending cuts.

“We certainly are looking for if maybe there are those Republicans who have some ideas about what to do,” House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said. “They certainly are in a place where they have a very strong hand right now.”

The Senate Republican leader was willing to take on the job.

“They are looking at Republicans to offer our solution,” Sen. Dave Senjem, R-Rochester, said. “We are certainly willing to work with them. ... If Republicans have to step up and lead the majority, if you will, Republicans will step up.”

House Republican leader Kurt Zellers, R-Maple Grove, did not jump at the chance Kelliher presented. Instead, Zellers said, budget talks need to involve five parties: House and Senate DFL and GOP leaders and the Republican governor.

“I don’t think anybody should be the one person to solve it,” Zellers said.

Rep. Rod Hamilton of Mountain Lake, an assistant GOP leader, entered negotiations for the first time on Tuesday.

“I’m the eternal optimist,” Hamilton said, but could offer no specific solutions to the budget problem.

However, he said, “everybody is responsible in that room. They are just standing up for what they believe in.”

Hamilton said he was brought in because he has worked with Democrats, including being vice chairman of an agriculture committee and helping pass a gasoline tax increase over Republican objections.

On Monday night, Democrats passed with no GOP support a budget-balancing bill that included a tax increase. Pawlenty vetoed the tax increase, mostly on the top-earning Minnesotans, soon after it hit his desk on Tuesday.

The governor said that he could not accept a new, higher, tax on Minnesota couples who make $200,000 a year. He said about 122,000 taxpayers would be affected with an average $2,800 tax increase.

“It is nonsensical to increase taxes on job providers merely weeks after I signed a bill to provide tax incentives for Minnesota businesses to grow jobs,” Pawlenty wrote in a letter explaining his veto.

Zellers expressed optimism that budget talks will be more productive after the tax veto. He speculated that Democrats may have had to get the tax increase talk out of their system.

House Majority Leader Tony Sertich, DFL-Chisholm, said the Legislature-passed bill was 85 percent the governor’s plan, leaving just 15 percent to negotiate.

The bill Pawlenty vetoed had three major parts, along with some minor fund transfers:

- $1.7 billion in delayed state payments to schools.

- $737 million in spending cuts.

- $445 million in tax increases.

The constitution requires the Legislature to pass all of its bills no later than Sunday, although it can return on Monday for a ceremonial meeting.

Tellijohn and Davis report for Forum Communications Co., which owns the Daily Globe.

ST. PAUL -- A Democratic-Farmer-Laborite spending cut and tax bill ended up trashed late this morning.

Republican Gov. Tim Pawlenty fulfilled his promise to veto the bill soon after it arrived in his office.

The governor said that he could not accept a new, higher, tax on Minnesota couples who make $200,000 a year. He said about 122,000 taxpayers would be affected with an average $2,800 tax increase.

"It is nonsensical to increase taxes on job providers merely weeks after I signed a bill to provide tax incentives for Minnesota businesses to grow jobs," Pawlenty wrote in a letter explaining his veto. "This behavior sends a confusing and mixed message to companies looking to produce jobs in Minnesota."

Pawlenty long has opposed state tax increases and refused to consider higher taxes as part of an effort to fill a nearly $3 billion budget deficit.

House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, put the next budget-balancing move in the hands of Republicans now that Pawlenty has vetoed the proposal that included an income tax increase of more than $400 million for the richest Minnesotans.

Kelliher said during a Tuesday morning conference call that House leadership planned to feel out House Republicans to see if they have any ideas that could balance the deficit.

"We certainly are looking for if maybe there are those Republicans who have some ideas about what to do," she said. "They certainly are in a place where they have a very strong hand right now."

One suggestion floated late Monday, after the House and Senate passed the budget bill with only DFL support, was that spending cuts for the current budget cycle only could pass. Republican lawmakers had said they wanted permanent cuts that would last beyond the current budget.

There were no talks scheduled between legislators and Pawlenty as both sides grapple with the deficit, although Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said he wanted to set up a meeting.

The House and Senate both passed bills Monday that included a $445 million tax increase that Pawlenty promised to veto even before debate began.

Kelliher was non-committal when asked if the House would try to override his veto. However, it passed the House well short of the number of votes needed to override.

One issue bogging down negotiations is the need for a new source of revenue to ensure that the $1.7 billion in delayed payments to schools can be paid back.

"The governor is borrowing at an unprecedented rate," the speaker said.

Kelliher did not rule out the need for a special session to deal with the budget issue. But she added there are only a couple of other major bills left to pass and she expects that work to be done by Thursday.

The Legislature must pass all of its bills no later than Sunday, although it can return on Monday for a ceremonial meeting.

Tellijohn and Davis report for Forum Communications Co.

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