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Lawmakers begin buget-cutting exercise

By Don Davis

St. Paul Capitol Bureau

ST. PAUL - Most state agencies would cut budgets 3 percent to 4 percent, money would be moved from one fund to another and budget reserves would fall as Minnesota legislators try to balance the state budget.

The House and Senate debated different, but similar, bills Thursday to fill a projected $935 million state budget deficit. The Senate gave preliminary approval to its bill on a voice vote Thursday night, while House approved its bill 83-49 after a 14-1/2-hour debate that stretched into Friday morning.

The debates were just an early step in the budget-balancing act because many proposals from the Democratic-controlled Legislature do not match Republican Gov. Tim Pawlenty's budget plan, forcing further work to complete the budget fix.

"Those bills are not going to be acceptable in their current form," Pawlenty said during his weekly radio show Friday morning.

House Majority Leader Tony Sertich, DFL-Chisholm, said he thinks there are many portions of the House and Senate bills Pawlenty can accept, so he is optimistic a deal can be negotiated.

"There are differences in the details," Sertich said.

The House and Senate would increase funding to public schools while cutting many agencies' budgets less than the governor proposed.

Last year, lawmakers approved a $34.7 billion, two-year budget. Thursday's bills were to tweak that budget as a sluggish economy affects the state.

The bills propose some revenue increases, including closing a corporate tax loophole, to help reduce the deficit. Also, the bills take funds from the state budget reserve fund and other funds throughout state government to plug the hole.

Rep. Torrey Westrom, R-Elbow Lake, said piling so many issues into one bill makes it "ripe for a challenge" in court. The state constitution requires each bill to deal with just one subject, and he said that in the past few years courts warned lawmakers not to violate that rule.

"Let the court slap our hands," Westrom said.

Sertich, the majority leader, said Westrom and others often have voted for bills that contained at least as big a variety of topics as the one representatives considered Thursday.

Sertich said to Westrom: "What I heard from you was, 'Do as I say, not as I do.' ... Hypocrisy runs amok on the floor."

Democratic leaders said they did the best they could to preserve programs while also cutting deeply enough to balance the budget. They said it was painful.

"This bill is not a pleasant bill, but it's a bill that we have to pass," Senate Finance Chairman Dick Cohen, DFL-St. Paul, said.

Committee chairmen said they tried to craft a budget fix that did little harm to programs. But House Health Care Chairman Tom Huntley, DFL-Duluth, said he could not avoid all pain.

"We do have severe cuts to hospitals," Huntley said.

The House bill cuts $45 million from hospitals, but since the federal government matches that money with its own aid, Minnesota hospitals more likely would lose $90 million, he said.

"That is the only thing I could do in this bill to protect nursing homes and long-term care facilities," Huntley added.

The House and Senate both put more money into nursing homes than Pawlenty proposed, enough to give workers pay increases next year.

Pawlenty's proposal would not have allowed those raises.

While most finance chairmen decried cuts they were forced to make, education leaders took a different view.

"This is a ray of sunshine," House Education Finance Chairwoman Mindy Greiling, DFL-Roseville, said.

The House bill would raise per-pupil state funding $51, while the Senate supports raising state funding $35 per student.

"It is with great pleasure and a little bit of a sense of humility that E-12 education has fared better than many of the other divisions," Senate Education Finance Chairman LeRoy Stumpf, DFL-Plummer, said about his early-childhood-through-high-school funding bill.

Stumpf and Greiling get money by killing or slowing Pawlenty's Q-Comp program that changes how teachers are paid from traditional tenure-based systems to a more merit-based form.

Rep. Tom Rukavina, DFL-Virginia, and Sen. Sandy Pappas, DFL-St. Paul - the top higher education lawmakers - said their bills treat public colleges and universities better than the governor. They said their bills would not require higher tuitions, but the governor's proposed cuts would.

Sen. Ellen Anderson DFL-St. Paul, said the Senate bill cuts $13 million from environment and natural resources programs. Anderson said senators accepted some Pawlenty budget proposals, but did not target park and clean water funding.

"What we did was focus on reducing the increases that some programs received (last year)," Anderson said. That included a $1.5 million cut to a program promoting expansion of E85 fuel, a mix of 85 percent ethanol and 15 percent gasoline. The program still has enough funding to continue, she said.

Pawlenty was critical of the Legislature's budget-balancing approach, but Sertich said there was no reason for the governor to have his fingers in the bills so far.

"I feel it is important that all the legislators have a say," he said, adding the governor needs to become involved once bills are through the House and Senate.

In similar situations, Pawlenty has not been willing to truly negotiate, Sertich said. He won't meet legislators half way, Sertich said, but says "meet me at my position."

One of the Senate's moderate Republicans said the bill his chamber passed has no major problems.

Sen. Steve Dille, R-Dassel, said that one objection he had was that senators voted to cut their budget 3 percent, while many agencies would be forced to chop 4 percent.

State Capitol Bureau reporter Scott Wente contributed to this story.