Pawlenty draws dire economic picture
The governor has scheduled an emergency cabinet meeting Friday to consider choices in the event of a shutdown.
Painting a dire budget scene, Gov. Tim Pawlenty will start preparing Friday for a possible government shutdown or major cutbacks in government services.
Pawlenty began planning for the worst after Wednesday's Minnesota Supreme Court ruling that his 2009 unilateral budget cutting was illegal. While the 4-3 decision addressed only Pawlenty's cut to a $5.5 million nutrition program, the state could be on the hook to pay more than $1 billion if other plaintiffs come forward.
"I am very worried. It is a huge problem," said Tom Hanson, commissioner of management and budget. Worries about what could lie ahead have kept him from sleeping, he said. "We just can't afford to pay all of this. We just can't."
The state's money woes go beyond a potential cash flow problem. The state's deficit now could be as large as $3 billion. Even before the court decision, legislators and the governor had a $536 million deficit with which to contend.
If they agree on how to close that gap before the session ends on May 17, the money problem would become more manageable. But until then, the pressure is on -- and the clock is ticking.
Pawlenty met with legislative leaders twice Thursday to begin to craft a budget solution. They made little apparent progress.
"We need to help the governor move off his rigid ideological approach. Otherwise this is not solvable," Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said after a morning meeting.
Pawlenty wants legislators to adopt the budget solution he put together solo last year -- the same one that legal action may upend.
DFL and Republican lawmakers weren't ready to do that Thursday. Pogemiller called that solution neither viable nor wise; earlier this year when the Senate voted on the Pawlenty plan, many Republican legislators opposed it.
Legislative leaders said they plan to count noses to see whether there is enough support now in either the House or the Senate for the governor's plan to pass.
Pawlenty began planning for the worst after Wednesday's Minnesota Supreme Court ruling that his 2009 unilateral budget cutting was illegal. While the 4-3 decision addressed only Pawlenty's cut to a $5.5 million nutrition program, the state could be on the hook to pay more than $1 billion if other plaintiffs come forward.
"I am very worried. It is a huge problem," said Tom Hanson, commissioner of management and budget. Worries about what could lie ahead have kept him from sleeping, he said. "We just can't afford to pay all of this. We just can't."
The state's money woes go beyond a potential cash flow problem. The state's deficit now could be as large as $3 billion. Even before the court decision, legislators and the governor had a $536 million deficit with which to contend.
If they agree on how to close that gap before the session ends on May 17, the money problem would become more manageable. But until then, the pressure is on -- and the clock is ticking.
Pawlenty met with legislative leaders twice Thursday to begin to craft a budget solution. They made little apparent progress.
"We need to help the governor move off his rigid ideological approach. Otherwise this is not solvable," Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said after a morning meeting.
Pawlenty wants legislators to adopt the budget solution he put together solo last year -- the same one that legal action may upend.
DFL and Republican lawmakers weren't ready to do that Thursday. Pogemiller called that solution neither viable nor wise; earlier this year when the Senate voted on the Pawlenty plan, many Republican legislators opposed it.
Legislative leaders said they plan to count noses to see whether there is enough support now in either the House or the Senate for the governor's plan to pass.
Despite the sobering budget message that was delivered Thursday -- "This is as serious as a heart attack," said House Minority Leader Kurt Zellers, R-Maple Grove -- the day also provided some reasons for hope.
Sen. Linda Berglin, chairwoman of the Senate Health and Human Services Budget Division, said she could cut about $340 million from the budget area she oversees, which includes adoption of most of Pawlenty's 2009 budget cuts.
"I don't think any providers have gone out of business yet," said Berglin, DFL-Minneapolis, although most of the cuts have yet to take effect.
The Coalition of Greater Minnesota Cities, which represents small cities and has been feisty in its fight for state aid, decided that it wouldn't sue the state to have its 2009 aid cut reversed. "It would be like suing a bankrupt corporation, so there's no point in it," said Tim Flaherty, executive director of the coalition.
At a Capitol news conference, St. Paul Mayor Chris Coleman and Minneapolis Mayor R.T. Rybak also indicated that they don't plan legal action any time soon.
Pawlenty's solo budget balancing last year, known as unallotment, cut about $300 million from aid to cities and counties. Officials said they can live with that budget bite but could barely survive if cuts go any deeper.
But, Pawlenty administration officials said that Minnesota's budget cannot survive if any other major recipient of state funding comes forward and demands back payment.
The governor called an "emergency cabinet meeting" for Friday morning to talk about "planning in the event of a government shutdown or a reduction of government services," said Brian McClung, Pawlenty's spokesman.
"This is a sign of how serious the situation is," McClung said. Back in 2005, parts of state government shut down after Pawlenty and the Legislature couldn't agree on a budget before the bills came due.
Pawlenty canceled a political trip to South Carolina to deal with the busted budget. The governor, a potential 2012 presidential candidate, was to make his first political foray into that early primary state to appear at a Friday reception for that state's GOP and a Saturday fundraiser for a congressional candidate.
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Sen. Linda Berglin, chairwoman of the Senate Health and Human Services Budget Division, said she could cut about $340 million from the budget area she oversees, which includes adoption of most of Pawlenty's 2009 budget cuts.
"I don't think any providers have gone out of business yet," said Berglin, DFL-Minneapolis, although most of the cuts have yet to take effect.
The Coalition of Greater Minnesota Cities, which represents small cities and has been feisty in its fight for state aid, decided that it wouldn't sue the state to have its 2009 aid cut reversed. "It would be like suing a bankrupt corporation, so there's no point in it," said Tim Flaherty, executive director of the coalition.
At a Capitol news conference, St. Paul Mayor Chris Coleman and Minneapolis Mayor R.T. Rybak also indicated that they don't plan legal action any time soon.
Pawlenty's solo budget balancing last year, known as unallotment, cut about $300 million from aid to cities and counties. Officials said they can live with that budget bite but could barely survive if cuts go any deeper.
But, Pawlenty administration officials said that Minnesota's budget cannot survive if any other major recipient of state funding comes forward and demands back payment.
The governor called an "emergency cabinet meeting" for Friday morning to talk about "planning in the event of a government shutdown or a reduction of government services," said Brian McClung, Pawlenty's spokesman.
"This is a sign of how serious the situation is," McClung said. Back in 2005, parts of state government shut down after Pawlenty and the Legislature couldn't agree on a budget before the bills came due.
Pawlenty canceled a political trip to South Carolina to deal with the busted budget. The governor, a potential 2012 presidential candidate, was to make his first political foray into that early primary state to appear at a Friday reception for that state's GOP and a Saturday fundraiser for a congressional candidate.
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The historic ruling says the governor's unallotments exceeded his authority. It also adds up to $2.5 billion to deficit.
In a rare rebuke, the Minnesota Supreme Court ruled Wednesday that Gov. Tim Pawlenty's solo move last summer to cut $2.7 billion from the state budget violated the law. The court's historic 4-3 decision immediately threw the legislative session into fresh turmoil and left thousands of Minnesotans unsure about the fate of many state aid programs.
While the court ruled only on the cuts to a tiny nutrition program, its narrow decision now threatens to unravel all of Pawlenty's reductions as the Legislature enters its final week of the session. To prevent more lawsuits from other groups affected by Pawlenty's cuts, Democrats have asked the governor to rescind his action, called "unallotment," and return to the bargaining table "in good faith" to balance the budget.
The governor, meanwhile, challenged Democrats to ratify his earlier cuts or come up with a plan that does not raise taxes.
The court's decision is widely seen as one of the most significant rulings in state history and one that DFL legislators seized upon as boldly reaffirming their role in the budget process.
"This decision was really historic in nature in setting the parameters about the separation of powers," said House Majority Leader Tony Sertich, DFL-Chisholm.
The governor, who only the day before had threatened lawmakers with future unallotments if they failed to adopt a new round of budget cuts, blasted the ruling.
"I strongly disagree with this 4 to 3 decision by the court," said Pawlenty, whose unallotment move helped him build a national reputation as a crusading budget hawk. "Nonetheless it will require the Legislature and my administration to address its budget impacts."
Chief Justice Eric Magnuson -- a Pawlenty appointee who is stepping down from the court this summer -- wrote the decision, which found: "Use of the unallotment power to address the unresolved deficit exceeded the authority granted to the executive branch."
While the court ruled only on the cuts to a tiny nutrition program, its narrow decision now threatens to unravel all of Pawlenty's reductions as the Legislature enters its final week of the session. To prevent more lawsuits from other groups affected by Pawlenty's cuts, Democrats have asked the governor to rescind his action, called "unallotment," and return to the bargaining table "in good faith" to balance the budget.
The governor, meanwhile, challenged Democrats to ratify his earlier cuts or come up with a plan that does not raise taxes.
The court's decision is widely seen as one of the most significant rulings in state history and one that DFL legislators seized upon as boldly reaffirming their role in the budget process.
"This decision was really historic in nature in setting the parameters about the separation of powers," said House Majority Leader Tony Sertich, DFL-Chisholm.
The governor, who only the day before had threatened lawmakers with future unallotments if they failed to adopt a new round of budget cuts, blasted the ruling.
"I strongly disagree with this 4 to 3 decision by the court," said Pawlenty, whose unallotment move helped him build a national reputation as a crusading budget hawk. "Nonetheless it will require the Legislature and my administration to address its budget impacts."
Chief Justice Eric Magnuson -- a Pawlenty appointee who is stepping down from the court this summer -- wrote the decision, which found: "Use of the unallotment power to address the unresolved deficit exceeded the authority granted to the executive branch."
The court did not find Pawlenty's use of the unallotment unconstitutional, but said that he did violate the statute. Pawlenty offered a "strained interpretation" of the language in the law, Magnuson wrote.
In a lower court, Pawlenty had argued that a district judge wrongly inserted herself into a political dispute. He has said he used the power properly as the state entered its worst budget hardship since World War II.
In separate concurring opinions, Justices Alan Page and Paul Anderson expressed concern about the unallotment law itself. They said the law could create future problems because it grants the executive branch "virtually unfettered discretion" over budgets.
Magnuson wrote the opinion on behalf of the majority, joined by Justice Helen Meyer. Justices Christopher J. Dietzen, Lorie Skjerven Gildea, G. Barry Anderson, all Pawlenty appointees, dissented. All three dissenters are widely considered to be leading candidates to replace Magnuson.
"We are very pleased on behalf of our low-income, disabled clients who were affected by this decision," said Galen Robinson, an attorney for Mid-Minnesota Legal Assistance, who represented people using the nutrition program. It's satisfying to know, he said, "that their benefits will continue to be paid so they can buy the food they need to be healthy."
"This is an affirmation that no one is above the law and that everyone is equal before the law," Ulvog said.
For local governments that lost millions in aid cuts, officials are trying to figure out their next step. They could file lawsuits, but risk a court win only to see the money vanish when lawmakers impose still more cuts.
"Minnesotans are tired of political games -- they want realistic solutions," St. Paul Mayor Chris Coleman said in a statement. "They want police officers on their streets and good teachers in their classrooms. Today's ruling is a call to action for the governor to return to the table and work with the Legislature to get the job done."
In a lower court, Pawlenty had argued that a district judge wrongly inserted herself into a political dispute. He has said he used the power properly as the state entered its worst budget hardship since World War II.
In separate concurring opinions, Justices Alan Page and Paul Anderson expressed concern about the unallotment law itself. They said the law could create future problems because it grants the executive branch "virtually unfettered discretion" over budgets.
Magnuson wrote the opinion on behalf of the majority, joined by Justice Helen Meyer. Justices Christopher J. Dietzen, Lorie Skjerven Gildea, G. Barry Anderson, all Pawlenty appointees, dissented. All three dissenters are widely considered to be leading candidates to replace Magnuson.
"We are very pleased on behalf of our low-income, disabled clients who were affected by this decision," said Galen Robinson, an attorney for Mid-Minnesota Legal Assistance, who represented people using the nutrition program. It's satisfying to know, he said, "that their benefits will continue to be paid so they can buy the food they need to be healthy."
No one above the law
Ruth Ulvog, who is on the special-diet program, praised the court for reining in the governor on behalf of those who seldom have a voice in such battles."This is an affirmation that no one is above the law and that everyone is equal before the law," Ulvog said.
For local governments that lost millions in aid cuts, officials are trying to figure out their next step. They could file lawsuits, but risk a court win only to see the money vanish when lawmakers impose still more cuts.
"Minnesotans are tired of political games -- they want realistic solutions," St. Paul Mayor Chris Coleman said in a statement. "They want police officers on their streets and good teachers in their classrooms. Today's ruling is a call to action for the governor to return to the table and work with the Legislature to get the job done."
The ruling is the latest installment in the high-profile and bruising budget battle between the Republican governor and the DFL-led Legislature. Coming less than two weeks before legislators are scheduled to adjourn, the decision could turn their budget headache into a full-blown migraine.
They estimate the ruling adds somewhere between $900 million to $2.5 billion to the budget deficit.
Lawmakers already faced an estimated $536 million deficit through the end of next summer. Now they must determine how much that deficit balloons and how much deeper they are willing to cut.
State Rep. Lyndon Carlson, who chairs the House Finance Committee, said the budget problems aren't as significant as the court's affirmation of the balance of power.
"Obviously the budgetary issue is important, but the retention of the balance of power between the executive and legislative branch is really the important question," he said.
Other lawmakers, still smarting from previous battles with the governor, saw the ruling as vindication.
"It isn't a dictatorship, it's a democracy," said state Rep. Tom Rukavina, who lost to the governor in a previous unallotment case. "This guy hasn't negotiated ever, at all, since he's been here and then he usually goes back on his word when he does try to negotiate."
While Pawlenty endured searing criticism at home, the Democratic National Committee used the ruling as ammunition as he tests a possible presidential run.
"Tim Pawlenty has continually abused his authority for political gain in unilaterally slashing vital services for Minnesota's working families, schoolchildren and elderly in order to curry favor with the far right wing of the national Republican electorate," Democrats wrote.
For his part, Pawlenty was cool when he addressed reporters after the ruling. He said the setback did nothing to curb his zeal for prudent fiscal management.
"I will fight to reduce spending and taxes in Minnesota and that battle continues," he said. "My commitment to the people of Minnesota remains the same: We will balance the budget without raising taxes."
To begin that work, the governor summoned lawmakers to his office Thursday morning to renew budget talks.
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Deficit could explode
Budget officials and legislative leaders expected to work well into the night on Wednesday to figure out the budget implications.They estimate the ruling adds somewhere between $900 million to $2.5 billion to the budget deficit.
Lawmakers already faced an estimated $536 million deficit through the end of next summer. Now they must determine how much that deficit balloons and how much deeper they are willing to cut.
State Rep. Lyndon Carlson, who chairs the House Finance Committee, said the budget problems aren't as significant as the court's affirmation of the balance of power.
"Obviously the budgetary issue is important, but the retention of the balance of power between the executive and legislative branch is really the important question," he said.
Other lawmakers, still smarting from previous battles with the governor, saw the ruling as vindication.
"It isn't a dictatorship, it's a democracy," said state Rep. Tom Rukavina, who lost to the governor in a previous unallotment case. "This guy hasn't negotiated ever, at all, since he's been here and then he usually goes back on his word when he does try to negotiate."
While Pawlenty endured searing criticism at home, the Democratic National Committee used the ruling as ammunition as he tests a possible presidential run.
"Tim Pawlenty has continually abused his authority for political gain in unilaterally slashing vital services for Minnesota's working families, schoolchildren and elderly in order to curry favor with the far right wing of the national Republican electorate," Democrats wrote.
For his part, Pawlenty was cool when he addressed reporters after the ruling. He said the setback did nothing to curb his zeal for prudent fiscal management.
"I will fight to reduce spending and taxes in Minnesota and that battle continues," he said. "My commitment to the people of Minnesota remains the same: We will balance the budget without raising taxes."
To begin that work, the governor summoned lawmakers to his office Thursday morning to renew budget talks.
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Health care for poor rescued
Hennepin County Medical Center and three other metro hospitals will participate in a slimmed-down version of General Assistance Medical Care (GAMC). Patient numbers will be limited at each facility.
It appears that Gov. Tim Pawlenty blinked.
A compromise state health plan for the very poor, on the verge of collapse just a few days ago, was rescued this week when the Pawlenty administration changed course and negotiated with participating hospitals to limit the number of patients each will see.
As a result, Hennepin County Medical Center and three other metro hospitals will participate in a slimmed-down version of General Assistance Medical Care (GAMC), a health plan for thousands of Minnesota's poorest and sickest residents. The four hospitals serve about 47 percent of the current 36,426 enrollees, none outstate. The remaining 144 Minnesota hospitals will treat patients and dip into a $20 million fund for that purpose.
The agreements reached Thursday were critical for Pawlenty because legislators are pressing hard to expand the federal-state Medicaid program to cover those patients -- a move he strongly opposes. A program in shambles would strengthen their hand.
With a limit of 9,400 patients a month and $32 million to finance their care, Hennepin County Medical Center and the Hennepin County Board voted Thursday to participate in the revamped program, which starts in three weeks. A few weeks ago, only one of the 17 key hospitals, Regions Hospital in St. Paul, had said it might participate.
The Hennepin County hospital cares for more than a fourth of all GAMC patients, far more than any other. Its agreement brought in three others -- Regions, North Memorial and the University of Minnesota Medical Center Fairview in Minneapolis. They will divvy up $71 million that was to go to the 17 hospitals. Other hospitals may join the program on Dec. 1.
A compromise state health plan for the very poor, on the verge of collapse just a few days ago, was rescued this week when the Pawlenty administration changed course and negotiated with participating hospitals to limit the number of patients each will see.
As a result, Hennepin County Medical Center and three other metro hospitals will participate in a slimmed-down version of General Assistance Medical Care (GAMC), a health plan for thousands of Minnesota's poorest and sickest residents. The four hospitals serve about 47 percent of the current 36,426 enrollees, none outstate. The remaining 144 Minnesota hospitals will treat patients and dip into a $20 million fund for that purpose.
The agreements reached Thursday were critical for Pawlenty because legislators are pressing hard to expand the federal-state Medicaid program to cover those patients -- a move he strongly opposes. A program in shambles would strengthen their hand.
With a limit of 9,400 patients a month and $32 million to finance their care, Hennepin County Medical Center and the Hennepin County Board voted Thursday to participate in the revamped program, which starts in three weeks. A few weeks ago, only one of the 17 key hospitals, Regions Hospital in St. Paul, had said it might participate.
The Hennepin County hospital cares for more than a fourth of all GAMC patients, far more than any other. Its agreement brought in three others -- Regions, North Memorial and the University of Minnesota Medical Center Fairview in Minneapolis. They will divvy up $71 million that was to go to the 17 hospitals. Other hospitals may join the program on Dec. 1.
First hint from Pawlenty
Until early this week, Pawlenty held firm against changes in the stripped-down health program, a compromise he reached with DFL legislators in March after vetoing a different extension of the 35-year-old GAMC.
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