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Budget talks 'at a little bit of an impasse'

ST. PAUL - Legislative leaders and Gov. Tim Pawlenty ignored Sunday's beautiful weather - 67 degrees and sunny skies - and huddled in the Capitol for a second straight day of closed-door talks designed to end the 2008 Legislature.

Talks went into the night, and an overall session-ending deal appeared unlikely before Monday, at the earliest.

In interviews during breaks in the talks, it became obvious the Health Care Access Fund is the major stumbling block - whether money should be taken out of it to balance a projected $935 million deficit in a $34 billion, two-year budget.

Pawlenty wants to take $125 million from the fund, half of what was in his original budget-balancing plan.

"We have done about as much as we can," Rep. Tom Huntley, DFL-Duluth, the House health and human services chairman, said after leaving the negotiations.

Even though Pawlenty says he is not using the health fund to balance the budget, Huntley said that is essence is just what he is doing. And Democrats won't go for that, saying the fund is for health care only.

Huntley said that during the time he was in the talks, no progress was made.

During a late-afternoon break, Senate Minority Leader Dave Senjem, R-Rochester, said the talks are "at a little bit of an impasse, but I am optimistic."

Use of the health fund, "is a critical piece," Senjem said.

But another factor is in play, he added: "There is a certain amount of theater in this."

Traditionally, the governor and legislative leaders need to reach a global agreement as each year's legislative session winds down. Those talks for this year's session began in earnest Saturday.

"We're going to have to intensely today talk about the health and human services area again and we also are going to begin, I think, another discussion on the basket of the tax-related issues," House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, said as she walked into Pawlenty's office early Sunday afternoon.

House-Senate conference committees face a Monday midnight deadline to finish their work, a task complicated if there is not budget deal reached with Pawlenty by then.

Lawmakers must adjourn by May 19.


Both sides - Republicans, led by Pawlenty, and the Democratic-controlled Legislature - agree to use three major methods of chopping down the deficit. But they don't agree on the specifics.

They would cut state programs, but have yet to specify all the programs to face the ax. They would take money from a variety of state funds with surpluses, but debate continues, especially, over the health-related fund that Democrats say should not be used to balance the budget but that Pawlenty wants to use. And they want to close some tax loopholes, such as one multi-national corporations use to escape paying Minnesota taxes, but don't agree on how far to go.

This year's budget talks are nothing like negotiations last year, which never did result in a full agreement between Pawlenty and legislative leaders. Last year, lawmakers and Pawlenty crafted the $34 billion budget. Now, they are trying to massage a fraction of the budget because the economy is slumping, which hurts state revenues.

Besides the budget deficit, negotiations include discussion about how to control property taxes. The House and Senate have differing versions, and Pawlenty wants to limit how much local governments can raise property taxes. Democrats strongly oppose a property tax cap.

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.