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Saturday, January 3, 2009
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Legislators caught in budget squeeze MINNESOTA LEGISLATURE '09 SESSION | A PREVIEW Associate Editor Listening to area state lawmakers as they brace themselves for Tuesday's convening of the Legislature is a little like eavesdropping on a group of waiters in a restaurant. The talk is all about "what's on the table" and "what's off the table."
Only instead of the blue plate special, lawmakers are debating what to do about the projected $4.85 billion budget shortfall in the next two-year budget cycle. Some experts say that shortfall figure could be more than $6 billion by the time the next economic forecast comes out in late February or early March.
Gov. Tim Pawlenty fixed a $426 million shortfall for the current budget with a combination of unallotments after draining the reserve budget.
For Sen. Paul Koering, R-Fort Ripley, raising taxes is off the table and so are any pay raises in state contracts that haven't all ready been negotiated.
"I pretty much tell people that the tax option is off the table for me," he said. "For any elected official to be advocating raising taxes now is just reckless. Who do you tax? Do you tax somebody who's just lost his job?"
Koering is also calling for no increases for state employees whose contracts are being negotiated.
"We in state government are recommending to our friends in county, city and school districts that they should be looking at doing the same thing," Koering said. "I believe you lead by example. Raising somebody's wages when people are losing their jobs is just not the right thing to do. Just because somebody works in government, that doesn't mean they should be immune to what's happening. I would rather freeze everybody's raises and try to protect as many jobs as we can.
"What really gets me is when other government entities are not fiscally responsible then they blame the state of Minnesota," Koering said.
Rep. Al Doty, DFL-Royalton took a different tack. He called for a sensible approach rather than a quick-fix approach.
"Everything should be on the table," he said. "We don't want to (raise taxes) but you have to leave those things on the table.
Doty said that rather than formulating policies for the next election, the Legislature should formulate policies for the next generation.
"Raising taxes would be the last thing we would want to do," he said. "You can't do a deficit this size or a shortfall this size with just cuts. The excess, the fat has already been trimmed. This is slash and burn now. This isn't trimming."
Doty said health care reform could realize considerable savings but it would take a serious commitment to get it passed and to be able to override Gov. Tim Pawlenty's expected objections.
A former teacher, Doty said that even education is on the table when it comes to cuts. "Everything's on the table," he said. "That includes education"
Doty said that cutting education could be costly down the road, if it means we don't have an educated work force.
Koering said one problem with raising taxes on the rich is that they are often business owners and when they start to feel squeezed they could possibly lay off more people.
"Somehow we have to figure out how to get by with what we have," Koering said.
One non-revenue item that Koering said he would like to see addressed involves making revisions to changes that were made last year to the Green Acres program. The program was designed to encourage farmers to dedicate green space in order to reduce property taxes. However, Koering said language in last year's revision made it hard for farmers to participate without them placing too much of a burden on themselves financially.
Doty would like to see legislation surface that changes rules and makes counties a more active partner in green energy.
Rep. Larry Howes, R-Walker, said hard budget cuts will have to be made. He doesn't anticipate there will be much sentiment for raising taxes.
"I don't see a whole lot of Democrats saying 'We're going to raise taxes.'"
He said new initiatives that are going to cost money are gone this year because the tobacco fund and the rainy day fund have been pretty well depleted.
"We just don't have any pools of money laying around," he said. "We've pretty much robbed them all."
Howes, who's been in the Legislature for more than a decade doesn't buy the proposition that the deficit will be addressed and resolved early in the session. He thinks it will take awhile and predicted the Legislature would not complete its work in time for its scheduled May adjournment.
"We go down to the end even when we have lots of money to spend and everyone's happy," he said.
The Walker Republican doesn't expect to see large cuts in education, but some streamlining might be done.
Rep. John Ward, DFL-Brainerd, said education is the best investment the state can make but said that everything is on the table when it comes to balancing the budget - including cuts, accounting shifts and new revenue.
Asked if there were any more accounting shifts that could be made after previous budget shortfall solutions, Ward said he didn't know.
"We really need to scrutinize the budget and make sensible, wise futuristic cuts," he said.
Ward supports an education bill, House File 4168, which has been dubbed the new "Minnesota Miracle." While the measure would cost money, Ward said it would help ensure that education dollars are fairly and adequately spent.
"We still need (to fix) a funding formula - that in my opinion is broken," Ward said. "When we don't properly fund education it costs the states millions and millions of dollars."
He also favored a jobs program that would stimulate the economy and revisions that would eliminate the exemption seasonal property owners have that does not require them to pay a share of school operating levy referendums. Ward said he'd also like to revise a law that places additional burdens on school districts seeking to find qualified van drivers.
Sen. Mary Olson, DFL-Bemidji, said the state, at some point, should resume planning for inflation when it prepares a budget. She said critics of the current system, such as former Gov. Arne Carlson, have called it financially irresponsible.
"If we were going to build it into the budget now it would be a bigger hole," she said. "Eventually, somehow, we're going to have to get back to more responsible budgeting."
Olson said a case can be made for certain revenue enhancements. The Minnesota tax system allows business executives to defer income or bonuses for many years and then move to a state such as Florida with no income tax.
"Those benefits, most people would agree, are unfair," she said.
The Bemidji lawmaker said the duty of lawmakers is to help the majority of citizens and make sure there is a safety net for people.
She expressed concern that Minnesota was not doing as well economically as other states and related that to cuts in K-12 and higher education. She said the state is on the cusp of big changes in the work force with significantly fewer workers and more retirees.
Olson encouraged people to stay in touch with lawmakers and to let them know if they're looking for a specific response to a question or if they're just weighing in on an issue.
"There are some opportunities that come from these difficulties and one of the opportunities is to look at our overall budget from top to bottom," Olson said. "Where we are redundant with services...we should be looking at how we can streamline those services."
MIKE O'ROURKE may be reached at mike.orourke@brainerddispatch.com or 855-5860.
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