ST. PAUL -- He warned it would hurt.
Gov. Tim Pawlenty -- confronting a projected $4.2 billion budget deficit while abiding by a no-new-taxes campaign pledge -- has proposed a two-year budget plan that reshapes programs for the needy, freezes wages for all public employees for two years, boosts or adds fees for some services and forces colleges and local governments to get by with less state help.
Although his $28.1 billion budget is the largest ever by about $1 billion, funding for most programs would stay the same, be reduced or go away completely. The plan, Pawlenty said Tuesday, "touches every Minnesotan in some way or another."
Campers would pay more for state park permits. Tuition at public universities would undoubtedly rise. Cities and counties would have to cut back on services, too, or hike property taxes to fill the void. The social service safety net would catch fewer poor citizens.
Pawlenty said his recommended actions, which require legislative approval, mark necessary sacrifices to bring fast-growing state spending back in line with tapering tax collections.
Scrutiny of the proposal begins immediately -- both in Capitol hearing rooms and in dozens of town hall meetings Democrats plan to hold. The first were set for Wednesday night in Red Wing and Maple Grove.
While the Republican-led House and DFL-controlled Senate will spend months debating alternatives, history shows that governors ultimately win much of what they propose.
Under his plan, health endowments set up with proceeds from Minnesota's tobacco lawsuit, worth about $1 billion, would be wiped out. Delays in payments to school districts and other accounting tricks would yield more savings to plug the deficit.
The governor also builds a $500 million reserve to buffer against future downturns in the economy and to protect Minnesota's top credit rating.
On the cut side, local governments sustain some of the biggest blows, seeing about a fourth of their aid disappear. Mayors and county commissioners predicted dire consequences -- closed libraries, untended streets and higher property taxes.
"Our cities are economic generators," said Detroit Lakes Mayor Larry Buboltz. "If we undercut the viability of our rural communities, we are hurting the state's economy."
Pawlenty justified his reductions to local governments by saying they were spared in earlier budget-balancing rounds. What's more, he recommended levy limits and reverse referendum, a mechanism for voters to overturn local tax increases.
"They haven't had one fiscal hair on their head touched in two years, at least from the standpoint of the state. And we're up here cutting budgets 10-15-20 percent," he said. "I don't think it's too much to ask cities and counties to participate."
Spending for primary and secondary schools rises under his plan, by 3.5 percent over the two years. But about half of Minnesota's school districts would suffer slight funding declines because of enrollment losses or other extenuating factors, according to education department figures.
Higher education would be cut by 9 percent under Pawlenty's plan (with a recommendation that tuition couldn't go up more than 15 percent over two years). Pawlenty would put $60 million more in financial aid programs, which he said demonstrates a priority of funding consumers over institutions.
Most state agencies would see an average cut of 15 percent.
In the health and human services area, the governor suggested merging two of the state's largest health insurance programs. General Assistance Medical Care, which serves about 30,000 childless adults, would be merged with MinnesotaCare, a program used by about 144,000 lower-income working people. Fewer people would be eligible for MinnesotaCare, and premiums and copayments would be increased.
Pawlenty called health spending "the public policy sumo wrestler" that must be tackled. "It is consuming us at a rate and scope that we cannot sustain," he said.
Prisons are another area where Pawlenty would save money -- by allowing double bunking in some rooms at two of the state's three highest security facilities: Stillwater and St. Cloud.
And he's recommending a two-year wage freeze for public employees at all levels, although he couldn't say how much it would save.
Judy Schaubach, president of Education Minnesota, the state teachers union, said flat wages represent a pay cut because employees won't see similar holidays from health premiums, rising gas costs and other expenses. Teachers might decide to leave the profession, she said.
"We're not hostages," she said.
To those who question his stand on taxes, Pawlenty said Minnesotans already pay among the highest taxes in the country. Raising taxes on things like cigarettes and liquor -- as other states have done -- would disproportionately affect low-income Minnesotans by taking a higher percentage of their incomes, he said.
Over the next month, Senate DFL members will hold more than 60 meetings across the state to gauge public sentiment on the Pawlenty plan.
"Governor Pawlenty presented a budget today that passes the buck to local government -- literally," said Senate Majority Leader John Hottinger of St. Peter.
Not everyone, however, was upset with the budget.
House Majority Leader Erik Paulsen said the GOP-led House supported the bulk of the plan.
"I think it's fair to say the framework the governor has proposed is balanced among all Minnesotans," he said. "The House and the governor recognize that John and Jane Minnesotan are asking us to balance the budget without raising taxes."
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