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Don Davis, Published May 13 2009

Deep revenue differences delay spending bills

ST. PAUL – The Minnesota legislative session will end smoothly if the Democratic-controlled Legislature and Republican governor can agree on a way to raise $1 billion.

There is no sign that is about to happen.

On Tuesday night, the costliest spending bills and the revenue to fund them remained stumbling blocks to ending this year’s session by Monday’s constitutional deadline.

Legislative leaders are determined to finish the outstanding budget bills – even without Gov. Tim Pawlenty’s acceptance – and vote on them in what promises to be a marathon session today.

But lawmakers continued to break their own deadlines. Tuesday was supposed to be the last day to send the governor compromise budget bills, but a half-dozen remained unfinished. Last week they blew past a deadline for negotiators to finish their work meshing House and Senate bills.

The key to bridging the budget gap seemed to be revenue – Democrats want to raise taxes $1 billion, while the governor wants to borrow that much to plug a budget deficit. They have not come close to agreeing on a compromise.

Pawlenty last weekend vetoed Democrats’ $1 billion tax increase, but that money remains key to the two biggest funding bills – public education and health and human services.

Pawlenty said he is considering whether to sign the massive bill funding health and human services programs that passed Monday. Talks on the education bill continued late Tuesday.

There were no signs of an imminent breakthrough on outstanding issues as the governor and legislative leaders struggle to write a two-year, $33 billion budget while filling a $4.6 billion deficit.

Pawlenty termed the differences between himself and DFLers “a pretty significant gap.”

Rank-and-file lawmakers watched the lack of progress from afar.

“I’m concerned,” Rep. Tim Faust, DFL-Hinckley, said of chances the budget will pass by Monday.

That was the attitude of many lawmakers, some of whom outright predicted an agreement is not possible in time.

Republicans said passage of the health and human services bill did not help matters.

“We are not going to get there if we keep passing bills like we did yesterday of nearly 20 percent increases in health and human services,” said Rep. Pat Garofalo, R-Farmington.

Pawlenty said health and human services program costs are rising so rapidly they threaten funding to other areas, such as education.

Emerging from talks with Pawlenty, Senate Majority Leader Larry Pogemiller, DFL-Minneapolis, said he thinks the governor will sign bills funding agriculture, veterans, economic development and other state programs. But he and House Speaker Margaret Anderson Kelliher, DFL-Minneapolis, reported no progress on the major sticking point – whether, and how, to raise revenue.

Neither side gave an inch Tuesday, with Pawlenty refusing to consider any state tax increase and legislative leaders turning down Pawlenty’s plan to borrow nearly $1 billion to fund state operations.

Most Republicans oppose tax increases that Democrats say are needed to prevent deep cuts in areas such as education. But even those who may consider backing higher taxes say they cannot buy into current plans.

“I want to make sure we are doing all we can do to lower our costs and reform how we are doing business,” Rep. Morrie Lanning, R-Moorhead, said before he would consider a tax increase.

Lanning blamed Pogemiller for brinksmanship that threatens a special session.

“He loves the drama we are in now,” Lanning said.

House Minority Leader Marty Seifert, R-Marshall, blamed Democrats for lack of budget progress.

“They are going to have to get off their stubborn position to raise taxes,” Seifert said.

Sen. Steve Murphy, DFL-Red Wing, said there is plenty of time to finish the session by Monday, but said Pawlenty has to immediately begin serious negotiations.

Lawmakers representing areas along the Red River said they worry that these late-session budget talks could threaten $67 million planned for flood prevention and recovery.

“You worry about leadership, if they somehow are going to hold the flooding money as a bargaining chip,” Lanning said.

Sen. Keith Langseth, DFL-Glyndon, said the flooding money is secure – for now. However, he said that he would worry if the public works spending bill that contains the funds is not wrapped up during the regular session; in a special session, he said, it could be threatened.

Davis works for Forum Communications Co., which owns The Forum. He can be reached at (651) 290-0707 or ddavis@forumcomm.com