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Minnesotans will notice what is in, and out, state budget

ST. PAUL - Minnesota legislators cobbled together the largest budget in history before leaving town this week, but two of the most noticed things may come out of their failures.

For instance, potholes and highway congestion may grow after Gov. Tim Pawlenty and lawmakers could not agree on a transportation funding bill. Also, homeowners' property taxes may rise if Pawlenty vetoes a tax bill as expected; even if he signs it, many property tax bills will be higher because lawmakers scaled back a plan to actually cut property taxes.

After working from noon Jan. 3 until 12:03 a.m. Tuesday to craft a budget, lawmakers did some things Minnesotans will notice.

For instance, a $3.2 billion higher education bill will help keep public college tuition in check and a $9.8 billion health and human services measure will provide 20,000 more children health insurance.

The bottom line for the $34.7 billion, two-year budget is that spending will increase 10.1 percent from current levels, continuing a long trend. The state budget first topped $1 billion in 1968-69, topped $10 billion in 1986-87, $20 billion in 1998-99 and $30 billion in 2006-07.

The exact budget details await Pawlenty's decisions in coming days.

The governor has three days from the time he receives bills from the Legislature to sign or veto them. The economic development bill landed on his desk Tuesday and those funding health and state government programs are to arrive today.

Pawlenty could veto some spending measures out of any of those bills.

A tax bill containing some homeowner property tax relief will hit his desk Tuesday along with bills funding higher education and public education. Pawlenty strongly hinted he would veto the tax bill.

Pawlenty said the legislative session ended with a "very sound financial picture for the state." The budget includes $200 million unspent on the bottom line for the two-year budget period beginning July 1.

An additional $794 million directed to public schools is "one of the larger increases in K-12 education in recent years," Pawlenty said. Total public school spending will increase by 5.8 percent over the budget period ending June 30.

While the health and human services funding bill included good initiatives, Pawlenty said, some of the new funding should have been spent elsewhere, such as on education.

"It is a very large increase and, in my view, a mis-prioritization of the relative growth of the budget," he said of new health care spending.

The governor touted his efforts to turn back $5.5 billion in proposed tax increases. Democratic-Farmer-Laborites sought tax increases in a variety of areas, including to provide property tax relief and to boost road funding.

"(Democrats) feel very strongly that you can't do that on the cheap," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said.

Pawlenty described the higher ed funding increase as "very robust."

Across the state college systems, tuitions have risen 70 percent in the past five years.

"Through this bill, the Legislature recognizes the central importance of strong state support for higher education and a need to control the rate of tuition increases," said President Bob Bruininks of the University of Minnesota.

Like many of the successful budget bills, the higher education bill started life plumper than it ended after the DFL-led Legislature negotiated with Republican Pawlenty.

Higher education spending represented a "good faith effort to hold down college tuition," said Sen. Kathy Saltzman, DFL-Woodbury.

Funding also went in to state health care programs - rather than cuts - Saltzman added, which she said should affect positive change.

More Minnesotans will be able to receive mental health care after Pawlenty and lawmakers hiked spending in that area $34 million. However, nursing home payment increases will be just 2 percent a year, a fraction of what proponents sought.

By the time Pawlenty finishes going through the major budget bills, they are "not going to be all I hoped for," predicted Rep. Kent Eken, DFL-Twin Valley.

Pawlenty is "not willing to budget on raising resources on the state level," Eken said.

The state's highways won't receive new money after Pawlenty vetoed a $7 billion, 10-year transportation funding bill and DFL lawmakers refused to consider the governor's plan to borrow money for roads.

Here are spending provisions that did not get much publicity (some await Pawlenty's approval):

-- Dairy farmers will be able to receive investment grants from a $500,000 fund. Another $2 million goes to improve the dairy business.

-- Cuts made to crime victim programs four years ago are restored, costing $3.4 million.

-- Ten new judges were approved to ease court backlogs.

-- Many Democrats wanted $400 million to fund all-day, every-day kindergarten, but came away with just $32.5 million.

-- Students in families that earn less than $75,000 annually could receive $1,200 to help pay for college.

-- Military personnel could receive $1,000 per semester for college costs.

-- Two state agencies received $45 million to help clean the state's water.

-- Nearly $40 million is being spent to increase housing, part of a long-term goal of policymakers. Among the programs is one that provides loans and grants for the poor.

-- Tourism spending was set at $22.3 million, an 11 percent increase.

-- Public radio and television stations will receive nearly $15 million.

-- More than $102 million will be used to increase Revenue Department auditing in an effort to collect taxes now going uncollected.

-- A 3 percent pay raise was funded for most state employees, although union negotiations will determine the final number.

State Capitol Bureau reporters Scott Wente and Mike Longaecker contributed to this story.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.