Gov. Tim Pawlenty announced Minnesota's largest-ever budget cut Tuesday, reducing state aid to local governments, lowering health care funding, trimming state college budgets and, in general, shrinking the size of state government.
Pawlenty's cuts equal nearly $736 million. Along with a $1.8 billion delay in state payments to schools, it will make up most of the $2.7 billion he needed to balance the state budget.
Lawmakers a month ago passed, and Pawlenty signed, a budget that would have spent almost $33 billion in the next two years. But Republicans rejected a tax increase passed by the Democratic-controlled Legislature, leaving a little more than $31 billion in revenue to pay the state's bills. Pawlenty said that left him no choice but to unilaterally cut spending.
While the biggest portion of Tuesday's budget-balancing action was delaying $1.8 billion in state payments to school districts, Pawlenty said in the long run schools will get all the money due them.
He plans to cut $300 million out of $1 billion in state aid local governments had planned to receive, a proposal city and county leaders say will force local property taxes to rise.
ADVERTISEMENT
The governor also would trim $236 million from a variety of health programs.
That comes from $9.3 billion the state planned to spend on health programs, mostly for poor Minnesotans.
His plan would slice $100 million from $3 billion state colleges and universities had expected.
Most state agencies would be cut another 2.25 percent, beyond a Legislature-passed 5 percent cut, which will force an unknown number of state workers out of their jobs.
The cuts will not occur until the new budget begins on July 1. Pawlenty said he could make changes before taking final action.
The governor repeated his oft-stated concept that because families are financially hurting and being forced to cut back, government should do the same during the current recession.
"The overall impact of these reductions will be to have state government live on about 96 or 97 percent of what it's living on right now," he said. "The impact will be felt, but we will get through this difficult economic period and position Minnesota for future growth by reining in government spending and keeping our state competitive."
Democrats said tens of thousands of jobs will be lost under the Pawlenty plan and cuts overall are closer to 10 percent of the state budget. They also said the plan, known as unallotment, will leave the state with a fiscal hole of about $5 billion when a new budget cycle begins on July 1, 2011.
ADVERTISEMENT
Wadena Mayor Wayne Wolden, Coalition of Greater Minnesota Cities president, predicted the Local Government Aid cuts will lead to higher property taxes to support communities.
"The governor's cuts are wrong, and it's time for state leaders - both Republicans and Democrats - to put their residents first and prioritize funding for safe, affordable communities," Wolden said. "They need to speak out against the governor's cuts now."
Pawlenty said his staff has not figured out how many state employees need to be laid off. But the state's largest government employee union - the American Federation of State, County and Municipal Employees - estimated that 3,400 workers at all levels would lose jobs.
Assistant Senate Majority Leader Tarryl Clark, DFL-St. Cloud, said she fears "tens of thousands" of private and public Minnesota employees will be out of work due to Pawlenty's actions.
Many of those job losses, she said, would come from Pawlenty's health care cuts. Despite Pawlenty's claim that nursing homes would feel little impact and hospitals would be affected less than expected, Clark claimed they would feel the pinch.
